PLANO, Texas — The Federal Reserve kept their benchmark overnight target rate at 5.25%.

This is the tenth month and sixth consecutive meeting the FOMC has retained its key rate at 5.25%. Many debate whether inflation will slow enough to allow a cut in rates this year. The Fed’s preferred price gauge, the personal consumption expenditures price index, has been at or above the top of the 1% to 2% comfort range of at least a half dozen policy makers for almost three years. The index rose 2.1% in the 12 months to March, down from 2.4% in February. Any rate cut at this time would promote the idea that the Fed has a new level of acceptable inflationary risk.

For credit unions, this will continue to put upward pressure on cost of funds until a time when higher rates are perceived by members, according to Brian Turner, manager of advisory services at Southwest Corporate. Term certificate volumes have increased significantly over the past few quarters in anticipation of either stagnant/lower rates or widening margin to non-term rates, he added.

“Consumer and mortgage loan rates should hold nicely and possibly experience somewhat higher levels in the short-term. Unfortunately, this will also retain market volatility for the two-year US treasury benchmark, currently 4.71%, 22 bps higher from its most recent low of 4.50% on March 13,” Turner said.