As a seafarer, I pay a great deal of attention to tides. Just as tides rise and fall, so does the economy. Both move so gradually that, unless you force yourself, you won’t notice until they become a potential problem.

As a member of the Federal Reserve Bank St. Louis Community Depository Institutions Advisory Council in 2011 and 2012, I know the Fed wants to recover its ability to stimulate the economy by lowering rates. To do that, rates must increase. Today the Fed raised its benchmark rate to 0.75 to 1.0 percent. What is unknown is how much the rate will increase going forward.

I led a credit union through many interest rate cycles. Here are two ideas to take advantage—or mitigate the effects—of higher rates.

1.  Loan Demand. During an expansion, loan demand increases. Can your CU fund loan growth of 20 percent?

2.  Liquidity. Is it sufficient to fund higher loan growth rates? Is it time to review alternate sources? Suddenly needing to raise liquidity through certificates of deposit is a costly option to avoid. Can your CU sell long-term fixed rate loans?

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