Our Virtual Leasing Panel responds to our question about what dealers can expect on interest rates.
In our May print issue, six leasing company executives, each highly visible at imaging industry events, responded to questions about declining print output and falling hardware prices, financing Managed IT and solutions, their ability to handle e-signatures, and more. Here, panelists offer their take on the what’s going to happen with interest rates in 2019.
Participants include Phil Buysse, SVP, division manager, office equipment, US Bank; Nick Capparelli, managing director, LEAF; Fred Carollo, office products originations leader for Vendor Equipment Finance, TIAA Bank; Michael D’Errico, director, Equipment Finance, Office Imaging unit, CIT Group Inc.; Jennie Fisher, VP-general manager, Office Equipment Group, GreatAmerica Financial Services Corp.; and Rob Parker, senior vice president, Wells Fargo Equipment Finance.
CR: What do you think is going to happen with interest rates?
Buysse: Based on recent signals from the Fed, interest rates are expected to remain stable throughout the final three quarters in 2019. Should these indications hold true, dealers and customers will continue to enjoy historically low interest rates.
Capparelli: The Wall Street Journal on March 20, 2019 reported that the Federal Reserve left rates unchanged and that further rate increases this year are unlikely. There is much speculation about 2020. What happens next year is anyone’s guess.
Carollo: We thought going into 2019 that it would be a rising rate environment. So far, that has not proved out and indications are that 2019 may stay constant. Rates are a difficult thing to forecast since there are so many factors that affect it. None of us operate in a vacuum, so my thoughts are that where they go, we will all respond as an industry. This industry has seen them change much over the years and typically whatever direction they go, we all just adapt.
D’Errico: If I knew that, this would be my last interview! Kidding aside, the Fed’s latest public forecast is all we know. But we are agile enough to react quickly to help our dealers as market conditions continue to evolve.
Fisher: Going into March, there were three primary factors driving the market. Now, as we enter April, we can reflect on those.
- The March FOMC (Federal Open Market Committee) meeting:”¯As part of the March FOMC, the Dot Plot was released. The Dot Plot signals to the market where rates and the Fed Funds Rate outlook is projected to trend over the next 12 months. In the Dot Plot released in conjunction with this meeting, the two rate increases originally forecasted in calendar 2019 were lowered to zero. Additionally, there was a dovish tone around future rate hikes. This news was clearly impactful, as between the 19th and 20th when the notes were released, rates dropped significantly.
- The “Brexit” vote: This has been pushed back several times. The deal has been altered and rejected numerous times. It is difficult to guess what the final deal will look like in order to assess its impact on interest rates.
- A trade deal with China: Should there be an agreement reached and tariffs drop, the market will likely be impacted positively, as it relates to interest rates.
Though it is impossible to predict what interest rates will do, hopefully, the above factors cast a little bit of light on the current environment.
Parker: We do not expect the Fed to cut rates in 2019, and we expect foreign central banks, including the European Central Bank and the Bank of England, to begin tightening either later this year or in the first half of 2020.
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