Questions and Insights for Board Consideration in Q3 2024

Areas Boards Should Be Considering for the Remainder of 2024 and Into 2025

The 4^th quarter will be supercharged with events and emerging trends that boards need to consider as 2024 comes to a close and we begin navigating into 2025. Our Weaver team of professionals has developed the following key topics to incorporate into your board meeting agendas to help stay on top of corporate strategy and emerging risks.

1. What does the Fed’s 50 basis point rate cut really signal and what should boards know about how its impact?

While many welcomed the Fed’s 50 basis point rate cut on September 18, this represents an aggressive move that may signal weakness in the economy. Slashing borrowing cost underscores the Fed’s commitment to maintaining economic momentum and prioritizing growth over inflation. In light of the rate cut, boards should be keenly aware of certain key factors that could impact the company’s risk and strategy:

• With lower rates, is there opportunity to refinance or renegotiate existing debt and improve cash flow?
• Will lower rates impact consumer demand for the company’s products or services?
• Should the strategy change in light of a lower cost of capital? For those in the financial services sector, lower rates can squeeze net interest margins, impacting profitability, which requires boards to closely monitor the effects on earnings models.
• As rate cuts often lead to a weaker U.S. dollar, should boards evaluate the impact on imports/exports and any related hedging strategies used to mitigate risk?
• Has the board considered short-term market volatility and potential disruptions in capital markets in planning and risk management strategies?
• Does the board need to communicate with investors, employees and other stakeholders about the impact and response to the rate cut?
• If the company is pursuing or plans to pursue an acquisition strategy, will lower rates increase the competition for deals as private equity comes off the sidelines?
• Will lower interest rates create an improved environment for strategic disposals?
• Given the lag between rate cut and response in the economy, are further reductions expected and should that impact the timing of corporate decisions?