WASHINGTON — The Federal Reserve Open Market Committee today trimmed the benchmark interest rate by 25 basis points to 2.0% as expected and signaled that it will defer any additional easing and monitor how the economy reacts to earlier rate reductions and to the tax rebate checks that began going out this week. The Fed said that inflation was moderate but still a concern.
Brian Turner, director, advisory services for Southwest Corporate Investment Services in Plano, Texas said that for credit unions, "This will lead to an increased cost of liquidity during a period of time when loan originations are sluggish. With an overnight investment rate of 2% and alternative two and three year investment alternatives approaching 4.0 to 4.2%, that cost approaches 210 basis points, or $21,000 per $1 million invested. Obviously for those with stronger loan demand, that associated cost is greater."
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