Pub. 11 2023 Issue 3

While it is understood that high inflation is bad for the country, the side effects of rapid interest rate increases on community banks cannot be ignored by the Federal Reserve. If they keep pushing interest rates higher as is expected, it will exacerbate the situation and community banks will suffer mightily. Additionally, there could be a potential impact on the FDIC’s deposit insurance fund balance which is already below target levels. There is no easy answer to the current situation and never mind the policies that caused the problems in the first place. Community banks cannot be sacrificed in the name of inflation reduction when they had nothing to do with causing the problem and are truly essential to local economies. Historically, the Fed has overcorrected in times like these and now would be a good time to hit the brakes before the situation becomes more damaging than it already is. Community banks are the economic backbone of many Montana and rural communities across the country. Our challenges cannot and should not be ignored in the name of a metric whose achievement could cause more harm than good across our industry. After years of serving our communities, we deserve better. Community banks cannot be sacrificed in the name of inflation reduction when they had nothing to do with causing the problem and are truly essential to local economies. Community Banker 21

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