Fed Pushing CU Rates Higher
WASHINGTON - (08/09/5) -- More than a year after credit unionscut their rates on bread-and-butter share accounts to all-timelows, rates on regular shares, checking and money market accountshave started to inch back upwards. Average rates paid by creditunions on the core regular share accounts finally hit 0.8% lastweek, a year after bottoming out at a measly 0.74%, according toDataTrac Corp. Rates on checking and money market accounts alsobegan to move upwards in the last few weeks, to 0.48% and 1.27%,respectively. Credit unions and banks have been raising rates onCDs and other longer instruments since the Fed started liftingshort-term rates a year ago, but rates on regular shares andchecking accounts have lagged behind, according to Jeff Taylor, aNAFCU economist. The Federal Reserve is meeting Tuesday and isexpected to lift short-term rates again, by boosting the target onovernight funds by another 25 basis points, to 3.50%. Credit unionsin recent weeks have begun lifting rates on their core savingsproducts in response to the market, said Taylor. "The gap onshort-term rates has been starting to widen, so credit unionsrealized they have some catching up to do," he said.