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Navigating Financial Uncertainty

04.05.2022

Whether it’s international conflicts or the lingering effects of a pandemic, economic uncertainty remains a challenge from Wall Street to Main Street. Pinnacle Bank understands the need of its customers to find guidance during challenging times.

One of the ways our community bankers are helping is by providing more guidance and reassurance in matters of everyday banking and longer-term financial planning, particularly regarding economic issues like inflation.

Financial planning is vital for our customers, no matter their stage of life. Depending on your unique financial situation, you might consider insurance, estate planning, college planning, retirement planning and business planning as part of your overall financial plan.

These decisions are something Pinnacle Bank is happy to discuss with you. From a brief overview of our services to a detailed conversation with one of our planning experts, helping you is what makes our day.

How did we get to this economic position?

The Federal Reserve met in January. As expected, it affirmed the end of its tapering program, which is the unwinding of massive purchases of Treasury bonds and mortgage-backed securities. This practice was done to shore up the economy during the pandemic. Tapering started last November, and the Federal Reserve will no longer purchase new assets at the current reduction rate.

The Federal Reserve also noted it is appropriate to raise interest rates based on inflation conditions and the tight labor market. Americans have enjoyed rock-bottom interest rates for about 13 years. Interest rates for home mortgages are still low, and homeownership is often a path to financial growth, so it should still be in people’s financial planning.

Core” prices, which exclude food and energy, are up 6 percent from a year ago. And with Covid-related stimulus remaining in the economy, there is plenty of inflation in the pipeline. To help ease inflation, the market believes the Fed will raise rates 1.25% this year with a likely strategic path of a series of .25% rate hikes at the next 5 to 6 meetings.

So, what does this mean to you?

Short-term rates will rise along with federal rate increases, including home equity lines of credit and short-term consumer loans. Auto loans may increase but to a lesser degree. Long-term rates for mortgages should continue to tick upward by half a percent to 1.5% over the next two years.

Inflation might also mean higher wages, giving people more purchasing power. And no matter what market we’re in, we always recommend finding ways to save for retirement and big purchases and to have a financial plan in place.

We invite people who have questions about their financial situation to talk to us. Our philosophy is that customers are not transactions: Customers are people we want to serve with financial products to make their lives easier or more efficient.

If you would benefit from further discussion about how to combat inflation or for a discussion on financial planning overall, feel free to contact us at 877.759.7939 or visit your nearest branch.

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