WASHINGTON – The Federal Open Market Committee decided Wednesday to raise the federal funds interest rate range from 0.75% to 1%. CUNA says the action was expected, and CUNA anticipates similar actions later this year.
“This should be good for credit unions’ bottom line and consumers as rates on savings will eventually rise,” said Perc Pineda, senior economist at CUNA. “CUNA economists expect more obvious- but-manageable inflation pressures going forward and therefore expect two more Fed rate increases, bringing the Fed Funds interest rate up to roughly 1.5% by year-end. The modest increases in market interest rates will help keep consumers in a buying and borrowing mood and we continue to believe that credit unions will collectively post double-digit loan growth in the year.
“If we’re correct, 2017 will be the fourth consecutive year that credit union loan portfolios will grow at a pace of at least 10%,” he added.
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