The Federal Reserve will likely nudge rates higher next month and the economy is ready for it, according to one banking executive. The FOMC releases minutes from its October meeting today, which may provide clues about a December interest rate increase. Kevin Cummings, CEO of Investors Bank, doesn’t believe his customers will be hurt by higher rates. ‘If the economy picks up, wages will pick up and hopefully it will be neutral to the consumer and businesses,’ said Cummings. He added that it will be even more important to see what the Fed does after December, and whether several more rate hikes will follow. When asked if higher rates might price some consumers out of the mortgage market, Cummings indicated there is a potential risk for that. ‘It will be more difficult. But you’re talking to someone whose first mortgage in 1984 was 14%,’ said Cummings. ‘Rates are still historically low and hopefully those opportunities with increasing wages, increasing velocity in the economy, hopefully the housing market won’t get hurt by it.’ But Cummings noted that interest rate risk is his company’s biggest worry right now. ‘We’re more concerned with the flattening of the yield curve, which will hurt our margins,’ said Cummings. ‘If rates move gradually, we have a sufficient amount of capital to grow, and we’ll do fine.’
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