The Federal Reserve raised its benchmark interest rate, with the FOMC under Chair Jerome Powell emphasizing a data dependent path ahead. Banks are expected to lift prime rates, increasing costs on variable loans, credit cards, and lines of credit, including SBA 7(a) loans that are priced at prime plus a capped spread. Venture debt pricing and covenants may tighten, and debt service coverage can compress as interest expense rises. Higher risk free rates raise investor return requirements, pressuring late stage valuations and narrowing the IPO window. Improved yields on Treasury bills and government money market funds offer better returns on corporate cash and can extend runway. Founders are reviewing covenants, shifting some floating exposure to fixed, pacing hiring behind revenue, and prioritizing faster payback projects. Upcoming CPI, PCE, jobs, and the Fed's dot plot will shape expectations for how long policy remains restrictive.
Learn more on this news by visiting us at: https://greyjournal.net/news/