Federal Reserve Chairman Jay Powell has made it clear: short-term interest rates will continue to rise gradually, as the Fed orchestrates a fine balance between economic growth and the threat of inflation.

This is good news for those public and higher Ed entities that have cash to invest. If you need to borrow, now is the time to do it.

Moving On Up

If your entity is weighing the pros and cons of using cash vs. going into the marketplace to borrow for a capital project, first contact your Financial Advisor (FA). In many cases, the cost of borrowing may still be under 3.0%, while the value of cash should exceed 3.0% in 2019. As a result, the cash on hand can be put to work over the course of months and years; by yielding a higher level of interest earnings, you could offset the capital expense of borrowing.

The value of cash is only getting stronger, leading to more options of how you can put it to work.

At threeplusone, we help public and higher Ed entities evaluate both short- and long-term liquidity needs, leading to higher interest earnings with their financial institutions—and potentially lower borrowing costs. Keep in mind that our data and liquidity analyses demonstrate the value of strong cash management to rating agencies. We stress the best practices of liquidity management, focused on borrowing strategies and repayment over the life of the project.

As rates continue to move up, so can the value of your operating and non-operating cash. With its greater worth, you’ll be in a better position when you go to the market to borrow.

Whatever the case may be, those you serve will benefit from this upward trend—if your cash and borrowing strategies are proactively managed.

That’s where we can help.