The coronavirus, Fed rates, and cybersecurity: What you should know
The past few weeks have been an unprecedented time across the globe. The spread of COVID-19 has proven just how connected we are as a global community. While the social distancing guidelines from the World Health Organization and the Centers for Disease Control and Prevention ask us to keep a physical distance from one another, now is an important time to maintain that sense of community.
In addition to taking important measures toward limiting the spread of COVID-19, here are a few other things to keep in mind about the changing economic landscape.
What does COVID-19 have to do with interest rates?
“The coronavirus has made its presence felt in the economy, as the Federal Reserve cut its benchmark interest rate to nearly zero in an unprecedented second emergency rate cut in two weeks,” states Bobbie Jorgensen, vice president – controller for Park Bank. “Additionally, the Fed is also purchasing $700 billion in Treasury and mortgage-backed securities.”
This rate decrease is an attempt to prevent a recession in response to market conditions experienced the past several weeks, similar to measures taken during the Great Recession.
According to Josh Marron, chief banking officer of Park Bank, “It is important for our bankers and clients alike to understand that the Fed’s recent lowering of rates was done as a preemptive protective measure to combat any fear that the spread of coronavirus may be creating. The Fed’s rate cut was done to ease any impacts and to bolster confidence in the U.S. economy. Many economists see the Fed’s move to be a temporary boost to the financial markets, helping stabilize sentiment until the shock of coronavirus passes.
What does the interest rate cut mean to me?
As a consumer, a rate cut may provide some great short-term benefits. Lower Fed rates sometimes translate to lower rates on loans, so whether you’re looking to make a purchase of a home, business, or vehicle, your rates may be favorable.
These lower rates also mean an increase in refinance activity, and this cut in particular seems to be creating an exceptionally large demand. If you are looking to refinance your home, you can expect that turnaround times may be slightly longer due to the high volume.
While a rate cut on the loan side means great rates for consumers, it also means lower rates on deposit accounts. If your deposit accounts have a variable rate, you may see that rate drop, at least in the short term.
What other impact might COVID-19 have?
Times of vulnerability like what we are seeing today with COVID-19 often lead to increases in cybersecurity risks. Attackers often take advantage of the media hype around events like the current COVID-19 situation, so it’s a good idea to be extra vigilant in keeping your information safe.
“There is likely to be an increase in phishing attempts, with efforts to use the coronavirus to motivate people to comply with requests for information or funds,” says Jeff Kurek, vice president – information and cybersecurity. “For example, there may be emails falsely claiming to be from the Centers for Disease Control and Prevention, or from fake charitable organizations.”
Below are some measures you can take to protect yourself at all times but are particularly important right now.
- Do not click on links or open attachments included in unsolicited email;
- Trust only information from legitimate, government websites for updates and information regarding COVID-19;
- Do not disclose personal or financial information via email or respond to solicitations for this information; and
- Verify the authenticity of charitable organizations prior to making donations.
Jim Hegenbarth is president and CEO of Park Bank.
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