An unchanged interest rate does not mean capital is getting cheaper. Yet that distinction can easily disappear during budget planning: An expected rate cut becomes a justification for higher spending before it has happened.
Following September’s increase, the Fed held its policy rate target range at 3.75–4.00%. The decision passed by a 10–2 vote, with Lisa Cook and Beth Hammack preferring another quarter-point increase. That split shows why a pause cannot be read as a pivot. A further increase remains an option.
Sellf’s view: The real issue is whether rate expectations are weakening a company’s investment discipline.
A company that builds its 2027 plan around lower rates carries that assumption into its revenue targets, customer acquisition budget and acceptable payback period. The spending happens before the cut; the anticipated financing benefit has yet to materialise.
We assess that decision across three dimensions:
- Today’s cost: Does the marketing investment make economic sense at the company’s actual current cost of capital? The Fed’s policy rate provides context; it does not replace the company’s own financing terms.
- Time to cash recovery: When a campaign generates a sale, when is the cash collected? After product costs, discounts, returns and service costs, when does the investment pay for itself?
- Resilience without relief: Would the investment still deliver an acceptable return if financing conditions did not improve? If it would not, the budget depends partly on a rate expectation alongside the economics of growth.
This approach does not rule out long-term investment. It requires its funding needs and return horizon to be explicit. When capital is expensive, a shorter payback period makes it easier to put the same cash back to work funding further growth.
A marketing budget is a capital allocation decision. Can yours still be justified if the expected rate cut never arrives?