As Fed finally nudges up rates, impact to credit unions likely minimal

Confident in both the direction of the labor market and the prospects for inflation, the Federal Reserve Wednesday raised interest rates for the first time since before the financial crisis–a move that will have a subtle effect on credit unions.

The Fed has kept interest rates pinned at their near-zero levels since the downturn in an effort to catalyze economic growth. But with the economy finally waking from its lethargy, the Fed made the decision to bump up the target range for the rate to 0.25% to 0.5%, a slightly less accommodative policy position than before.

However, “the stance of monetary policy remains accommodative after this increase, thereby supporting further improvement in labor market conditions and a return to 2% inflation,” said the Federal Open Market Committee (FOMC), which sets monetary policy for the Fed.

As for what this means for the credit union movement, Mike Schenk, CUNA vice president of economics and statistics, told News Now that the increase should hit credit unions more softly than previous rate hikes.

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