JOHNS CREEK, Ga. — The Federal Reserve's recent decision to cut its benchmark interest rate by 25 basis points has many small business owners hopeful for some much-needed relief. Among them is Clay Gridley, owner of Six Bridges Brewing, a craft beer company he runs with his father, Charles. Since opening the brewery in Johns Creek in 2018, Gridley has faced fluctuating costs and rising interest rates on the federal small business loan he used to launch the business.
“Every time the Fed cuts rates, our loan goes down too,” said Gridley. “It’s great for us. We’re looking at about a quarter-percent reduction next quarter, which makes a big difference.”
Gridley’s brewery also has a location in Milton. What started as a hobby in his basement eventually expanded into his livelihood. Gridley said he has had to battle high inflation, rising raw material costs, and shifting consumer habits. He said several craft breweries in Georgia have shuttered, and he's in a fortunate position to stay open.
“We’ve had to pivot a fair amount," Gridley said. "But being a small business, we’re nimble. We’ve got our pulse on the local market, and we feel like we’ve done a good job.”
Tom Smith, a finance professor at Emory University’s Goizueta School of Business, said the Fed's move makes sense given current economic conditions. It comes two months after the Fed's first round of rate cuts since 2020. However, Smith cautioned that it will take time for these cuts to be felt across the broader U.S. economy.
“These rate cuts by the Fed should lead to overall downward pressure on interest rates for homes, cars, buying a new refrigerator,” said Smith. “But they’re not going to happen overnight.”
Smith also pointed out that other factors, including potential shifts in government policies, could influence the direction of interest rates moving forward. President-Elect Donald Trump has promised changes in immigration, tax and trade policy. Smith said those policy changes could result in potentially higher inflationary pressures. He said the Fed could potentially implement another interest rate cut next month, then wait and see how Mr. Trump's administration unfolds.
Fed Chair Jerome Powell's term is also expiring in 2026, meaning President-Elect Trump will get to appoint his successor. Mr. Trump appointed Powell in 2018. The two have not always agreed, and Powell said he would not step down even if Mr. Trump asked him to resign.
“The role of the Fed is to be an autonomous policy maker that is an arm’s length or two arms’ length away from the political environment," Smith said. "We don’t want the policy of today to dictate the kind of monetary policies we need to make sure our economy is working at an even pace.”
As small businesses like Gridley’s continue to navigate the current economic landscape, the hope is that the Fed’s actions will help create a more stable environment for growth. Gridley said he's optimistic about the future, especially with the rate cut coming on the heels of a tough period for businesses.
“The rate cuts should help reduce some of the financial strain,” said Gridley. “It was great during the pandemic because rates were very low. Now, they’re really high, and that makes a huge impact on the bottom line. This is hard work, but we get to make something people really enjoy.”