The Fed Held Again on July 29. Reprice Your Q4 Inventory Financing Before Purchase Orders Lock

A lot of holiday inventory plans written this spring carried a quiet assumption: money would be cheaper by the time the big purchase orders came due. In our own May reforecast note we described a path toward lower policy rates by year end. That assumption has not held.

On July 29, 2026 the Federal Open Market Committee kept the federal funds target range at 3.50 to 3.75 percent. The vote was 9 to 3, and all three dissenters wanted a quarter-point increase, not a cut. The statement says inflation "remains elevated relative to the Committee's 2 percent goal." The June Summary of Economic Projections had already moved the median end-of-2026 rate to 3.8 percent from 3.4 percent in March.

Whatever the Committee does in September, the planning input has changed. If your Q4 model assumed a lower borrowing cost for October through January, reprice it now, while supplier deposits, credit line draws, and promotional calendars are still adjustable.

Find every place the assumption is hiding

The obvious line is interest expense on a prime- or SOFR-linked inventory line or an SBA 7(a) loan. Those rates will move with policy, and the model should now carry the current rate through January, with a sensitivity case a quarter point higher.

Less obvious places:

• Revenue-based financing and merchant cash advances quote a fixed factor, not an interest rate, but the factor was set in a market that expected cuts. Any new advance you take for Q4 will be priced on today's view.
• Supplier terms. If you negotiated a deposit structure or extended terms on the theory that you would refinance cheaply later, the fallback plan is now more expensive.
• Platform lending offers. Pre-approved amounts and pricing on marketplace or payments-platform capital are repriced by the lender, not by your forecast.
• The refinance case. A plan to roll a high-cost advance into a bank line "once rates come down" should be replaced with a plan that works at current rates.

Recompute the carrying cost of the Q4 buy

Start from the inventory you intend to own on October 1 and the date you expect to be cash-positive on it. For each financing source, multiply the draw by the annual rate and by the fraction of a year you will hold it. Add fees and any minimum interest clauses. That gives a dollar cost of carrying holiday inventory, which belongs in the contribution margin of the promotions that will sell it.

Then rerun three decisions against that number:

1. Depth of buy. Units that only clear at a deep discount may not cover their own carrying cost once the line is priced at today's rate. Trim them or shorten the hold.
2. Promotion timing. Pulling demand forward into October can be worth more than it was when money was assumed to be cheap, because every week of earlier sell-through reduces interest.
3. Early-payment discounts. A supplier discount for paying early is often worth more than a few months of line interest. Compare the annualized value of the discount against the current cost of the line, not the cost you hoped to have.

Check covenants and cash cushions

If your line has an interest-coverage or fixed-charge covenant, higher interest for longer can tighten it in the same quarter that inventory peaks. Rerun the covenant test at the repriced rate for October through January. If it is close, talk to the lender in September, not December.

Keep the liquidity buffer you built under the pre-Q4 working capital plan intact. Cheaper money was supposed to be the release valve if sell-through lagged; without it, the cushion is doing more work.

What to do this week

• Replace every "expected rate" in the Q4 cash model with the current contractual rate and add a higher case.
• List each financing source, its repricing mechanism, and the next date its cost can change.
• Recompute carrying cost per SKU group for the holiday buy and feed it into promotion margin.
• Rerun covenant tests and the minimum cash balance through January.
• Decide which purchase orders, if any, get trimmed or delayed before they become non-cancellable.

Boundaries

Rates can still fall. The Committee meets again in September and its projections show a wide range of views. Your actual borrowing cost depends on your lender, spread, collateral, and the instrument, and none of the figures here are a forecast of where policy will go. The point is narrower: the plan should not depend on a cut that has not happened.

If you want a second pair of eyes on the repriced model before purchase orders lock, our fractional CFO team builds inventory and financing forecasts for ecommerce brands heading into Q4.