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The Federal Reserve Bank yesterday raised its short-term borrowing rate by 0.75 percentage point to a target range of 3.75% to 4%, the highest level since January 2008. It is the fourth consecutive 0.75% rate hike.

“The [Federal Open Market] Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run,” the committee said in a statement. “The committee anticipates that ongoing increases in the target range will be appropriate to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.”

Although recent indicators point to modest growth in spending and production, inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures, the committee said.

However, the central bank also hinted at a potential change in how it will approach monetary policy to bring down inflation, according to a CNBC report.

“I think everyone anticipated that the rates were going to be raised,” Rob Soucy, president of Port Harbor Marine in Maine, told Trade Only Today in a phone interview. “In terms of floorplan and the rates that we give to our customers, it’s all going to be impacted, and not in a good way.”

Soucy added that the four consecutive rate increases have impacted sales of new boats and customers who have boats on order.

“What’s been challenging is that people who’ve had boats on order, when we put the deal together, the rate was 4.5% and now it’s 6.5%,” he said. “For some people, that could be a game-changer.”

Taking an industry-wide perspective, Matt Gruhn, president of the Marine Retailers Association of the Americas, said, “We’ve already seen 70% of dealers saying interest rates are having a moderate to severe impact on boat sales.”

Gruhn said that consumers are not alone in feeling the pain of the economic volatility. “The raw materials have gone up, the cost to build the boats has gone up, the cost to ship the boats has gone up,” he said. “Dealers are going to need to increase their line of credit to have the right model mix and brand mix.”

That being said, Gruhn remains optimistic. “While there are headwinds with selling boats, the consumer is still pretty resilient, and household wealth is still pretty high,” he said. “People are still buying, which was shown at FLIBS by companies having record sales.”