The Federal Reserve will likely need to reduce interest rates at a faster pace than policymakers expect, said BHG Financial Chair and CEO Al Crawford on Aug. 27 during a regional company conference at the Lofton Hotel in downtown Minneapolis.
Addressing a room full of company staff and community bankers at The Lofton Hotel, Crawford expects interest rates will fall 200 basis points from their current mark of 5.25 to 5.50 percent before June 2025. He said there is a 71 percent chance the Fed will lower interest rates next month, and a 48 percent chance in November. An additional three interest rate cuts are expected before June 2025.
The Federal Reserve Open Market Committee has a 71 percent chance of lowering interest rates in September, Crawford said, citing the fed funds futures charts. The FOMC has a 48 percent chance in November. An additional three interest rate cuts are expected before June 2025 — 200 basis points in total.
Crawford’s comments came less than a week after Federal Reserve Chair Jerome Powell said he supports cutting interest rates during next month’s meeting. “The time has come for policy to adjust,” he said. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.”
Crawford also provided an overview of BHG’s financial condition. Since 2014, the company has originated $5.3 billion in consumer loans and $13.4 billion in commercial loans. Crawford noted consumers are trending toward pre covid loss levels, while their commercial loans “are in a bit more precarious position amid higher interest rates and inflationary pressures.”
Established in 2001, BHG Financial is 51 percent owned by original founders Al Crawford and Eric Castro, while Nashville-based Pinnacle Bank holds 49 percent ownership. BHG has two partner banks that fund consumer loans. The company has had more than 1,650 partners since it was founded, noted Meghan Crawford-Hamlin, president of the institutional division. Thirty-five percent of U.S. banks have worked with BHG.
There are more than 1,650 banks in BHG’s loan sale auction platform. Of those, 664 have acquired BHG loans over the past 12 months, with $1 billion having been sold so far this year.
