Newsroom
December 13, 2017
Fed increases rates 25 bps
The Federal Open Market Committee (FOMC), at the close of its two-day policy-setting meeting Wednesday, said it will raise the federal funds target rate by a quarter-point to a range of 1.25 to 1.5 percent.
The committee stressed that it "expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate."
"The FOMC's actions [Wednesday] were widely expected," said NAFCU Chief Economist and Vice President of Research Curt Long. "The committee struck a mostly positive note in its statement and appears poised for further rate hikes in the first half of 2018."
The committee's revised projections are three quarter-point rate hikes in 2018 and two to three in 2019. Long, in a NAFCU Macro Data Flash report, said these projections show improved expectations for economic growth and the unemployment rate next year.
Long added that Fed Chair Janet Yellen, in her final post-FOMC meeting press conference, identified tax reform as the main reason for the improved outlook. "Meanwhile, the committee revised its statement that labor market conditions are expected to 'remain strong' instead of 'strengthen somewhat further,' " he said. "This change might suggest that the labor market has achieved full employment, and that further improvements may be unsustainable."
While overall inflation and core inflation "have declined this year and are running below 2 percent," the committee expects inflation to stabilize around 2 percent over the medium term. The committee noted that it is "monitoring inflation developments closely."
The Fed will continue to reduce its securities holdings by decreasing its reinvestment of the principal payments from its holdings of Treasury securities and agency mortgage-backed securities. In accordance with the Addendum released in June, December's reinvestment will be trimmed by $10 billion. Effective in January, the amount of balance sheet reduction will increase to $20 billion per month.
The FOMC will meet again Jan. 30-31.
The committee stressed that it "expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate."
"The FOMC's actions [Wednesday] were widely expected," said NAFCU Chief Economist and Vice President of Research Curt Long. "The committee struck a mostly positive note in its statement and appears poised for further rate hikes in the first half of 2018."
The committee's revised projections are three quarter-point rate hikes in 2018 and two to three in 2019. Long, in a NAFCU Macro Data Flash report, said these projections show improved expectations for economic growth and the unemployment rate next year.
Long added that Fed Chair Janet Yellen, in her final post-FOMC meeting press conference, identified tax reform as the main reason for the improved outlook. "Meanwhile, the committee revised its statement that labor market conditions are expected to 'remain strong' instead of 'strengthen somewhat further,' " he said. "This change might suggest that the labor market has achieved full employment, and that further improvements may be unsustainable."
While overall inflation and core inflation "have declined this year and are running below 2 percent," the committee expects inflation to stabilize around 2 percent over the medium term. The committee noted that it is "monitoring inflation developments closely."
The Fed will continue to reduce its securities holdings by decreasing its reinvestment of the principal payments from its holdings of Treasury securities and agency mortgage-backed securities. In accordance with the Addendum released in June, December's reinvestment will be trimmed by $10 billion. Effective in January, the amount of balance sheet reduction will increase to $20 billion per month.
The FOMC will meet again Jan. 30-31.
Share This
Related Resources
Add to Calendar 2024-04-24 14:00:00 2024-04-24 14:00:00 Optimize Liquidity, Maximize Loan Growth: The Network Lending Advantage About The Webinar Join us to learn more about network lending, a cooperative model allowing credit unions to optimize liquidity and achieve loan growth. Discover how credit unions can participate in loan pools with other institutions, allowing them to diversify portfolios, access loans with potentially lower risk and higher yields, and expand lending capacity without necessarily needing a surge in deposits. Delve into how credit unions can pool their resources, set common underwriting and pricing standards, and collectively originate, buy, and sell loans to optimize liquidity management. Hear from your peers about best practices, case studies, and practical strategies to harness the full potential of network lending and how it's helped their credit unions. Don't miss this valuable opportunity to learn how to strengthen your credit union's position in today’s competitive environment. Key Takeaways: How network lending differs from traditional lending The benefits of participating in loan pools with other credit unions How credit unions can set common underwriting and pricing standards and collectively originate, buy and sell loans to optimize liquidity management Why network lending is critical to loan growth Watch On-Demand Web NAFCU digital@nafcu.org America/New_York public
Optimize Liquidity, Maximize Loan Growth: The Network Lending Advantage
preferred partner
LendKey
Webinar
Add to Calendar 2024-04-23 14:00:00 2024-04-23 14:00:00 Monitoring the Latest Litigation Risks Credit unions’ operations pose litigation risks, with more of these cases being filed as class action lawsuits. In this Monitoring the Latest Litigation Risks for Credit Unions webinar, you’ll review some of the specific kinds of lawsuits impacting credit unions and what potential claims could be on the horizon. You’ll also examine some options for mitigating risks. Key Takeaways Review the current lawsuit trends. Understand the potential claims risks Explore options for mitigating risks. Register Now $295 Members | $395 Nonmembers(Additional $50 for USB)One registration gives your entire team access to the live webinar and on-demand recording until April 23, 2025Go to the Online Training Center to access the webinar after purchase » Who Should Attend NCCOs NCRMs Compliance and risk titles Education Credits NCRMs will recieve 1.0 CEUs for participating in this webinar NCCOs will recieve 1.0 CEUs for participating in this webinar Web NAFCU digital@nafcu.org America/New_York public
Monitoring the Latest Litigation Risks
Credits: NCCO, NCRM
Webinar
Resiliency In Your Incident Response Plan
Cybersecurity
preferred partner
DefenseStorm
Blog Post
The Bottom Line on Insurance Tracking and Collateral Protection
Strategy
preferred partner
Allied Solutions
Blog Post
Get daily updates.
Subscribe to NAFCU today.