Second Fed Rate Cut May Ease CU Margin Pressure, Boost Lending
TALLAHASSEE, Fla. -- The Federal Open Market Committee cut the federal funds rate another half-point on Jan. 30, which will ease interest rates on consumer credit cards, home equity lines of credit, and auto loans, dropping it to 3.0% from 3.5%. The discount rate, what banks pay to borrow from the Fed, was also cut by a half-point to 3.5%.
Citing "downside risks to growth" that remain, the Fed stated the cuts "should help to promote moderate growth over time and to mitigate the risks to economic activity." The move was seen by credit union economic experts as positive in that it will likely help the yield curve to steepen, thus easing the margin pressure credit unions have been experiencing.