ALEXANDRIA, Va. The NCUA Board is expected to approve a new permissible investment for federally insured credit unions at next week’s monthly meeting, Treasury Inflation Protected Securities, or TIPS.
TIPS provide protection against inflation and the principal of a TIPS increases with inflation and decreases with deflation. TIPS pay interest twice a year, at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation.
When a TIPS matures, the holder is paid the adjusted principal or original principal, whichever is greater.
The NCUA Board is also expected to approve an expanded definition of “rural district” for field of membership for federally chartered credit unions.
