Interest-rate cut is welcome relief for business owners

The owner of Sleepy Hollow Sleep Shops found himself resting more comfortably after the Federal Reserve cut interest rates.

“We’re going to see an immediate effect. That’s terrific,” Bruce Berry said.

He has adjustable rates on loans used to build his five stores, and they will be coming down as banks reduce their prime rates after the Fed cut a key interest rate today.

Lower rates mean lower loan payments for Berry’s business.

“It frees up cash flow. That always helps,” he said.

The aid is especially helpful as a sagging economy has reduced sales a bit, he said.

“We’re doing all right, but we could be doing a lot better,” he said.

Not every borrower, however, will be helped by the Fed’s action, bankers said.

Mortgage rates, for example, won’t come down immediately, said Steve Lewis, president of First Place Bank.

Adjustable-rate mortgages normally are tied to one-year Treasury notes, while fixed-rate mortgages move with 10-year Treasury notes, he said.

Neither is directly tied to the federal funds rate, which the Fed cut from 2 percent to 1.5 percent. This is the amount that banks can charge each other for overnight loans.

For the complete story, see Thursday’s Vindicator and Vindy.com.