Help From Fed Rate Cut Expected Down the Road
The Federal Reserve’s surprise cut in short-term U.S. interest rates — with likely cuts to follow — should prove to be a major boost to a trucking industry that has been reeling from weak freight shipments. But since many manufacturers and retailers are still cutting back, it could be months before truckers see a significant upturn.
With the Fed now aggressively creating new money to head off a recession, the cavalry is clearly on the way. But the big question for the embattled freight-hauling sector is, “When will it arrive?” The hope is that the Fed’s action will spur enough confidence that the economy perks back up quickly.
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More immediately, though, some trucking companies with floating-rate debt will see fast relief on their cost side, since the Fed’s rate cut was followed by cuts in bank rates for loans such as those on truck equipment.
As economic analysts warned in the aftermath of the first Fed rate cut since 1998, it can take many months for changes in monetary policy to produce a clear impact on the broader economy. For trucking, that boils down to considerable uncertainty over when freight orders will significantly pick up again.
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