MADISON, Wis. — The Federal Reserve's announcement Wednesday that it will begin paring back its bond buying had no immediate impact on interest rates, a good sign for lending next year according to CUNA.
Steve Rick, CUNA senior economist, reported, "The fact that interest rates did not jump after the taper announcement is good news for interest-rate sensitive sectors like housing and autos. This will keep these very important credit union lending categories growing strong well into 2014."
The Federal Reserve agreed to
After a two-day Federal Open Market Committee meeting, officials said they decided to "modestly reduce the pace" of its monthly bond buying program to $35 billion in mortgage bonds and $40 billion in Treasury bonds starting in January.
"It's important to realize that this taper is not equivalent to Fed tightening monetary policy," Rick said. "It is a slowing in the expansion of monetary policy, which still remains highly accommodative."
He added that it appeared the taper of quantitative easing was priced into the bond market, which saw little movement in the 10-year Treasury interest rate right after the announcement.
