On September 17, the U.S. Federal Reserve Bank announced that it would not increase the benchmark interest rate that was being so closely watched by professional and amateur economist alike.
Generally, the Fed will raise this rate when the economy is showing signs of overheating, as evidenced by high inflation among other things. When it does raise the rate, inflation tends to moderate (i.e., prices don’t rise as fast).
Of course, all of us in procurement know that inflation has been as buyer-friendly as it has in decades (maybe forever) over the past few years. So, while the prospect of the Fed increasing the rate would have given us a little assurance that we probably wouldn’t have to worry about across-the-board rising prices in the near term, the lack of a rate increase isn’t all that bad news either.
First, inflation hasn’t been bad so if we’re in for “more of the same,” then so be it, right? Second, borrowing costs will remain low, so that means that our suppliers who survive on credit should generally be able to continue surviving.
Of course, there remains speculation that the Fed will raise rates as some point in the not-too-distant future. And, we’ll have to reassess the situation closer to that moment to evaluate any potential effects on the procurement world.
‘Til then, carry on and do your part to keep the micro-inflation that your organization faces low (or negative).