Credit union officials took news of the Federal Reserve keeping interest rates unchanged in stride.
On Wednesday, the Fed's benchmark federal funds rate remained unaltered in a range between 0.25% and 0.50%, as the U.S. economy appears to be on a mildly upward trajectory.
In its policy statement, the Federal Open Market Committee (FOMC) said "the labor market strengthened and that economic activity has been expanding at a moderate rate."
However, Fed officials also noted that "near-term risks to the economic outlook have diminished," suggesting that the central bank might consider a modest rate hike at the next meeting in September.
In response to the Fed's decision, Curt Long, chief economist at National Association of Federal Credit Unions (NAFCU), described the tone of the FOMC statement as "largely positive."
"The assessments of the economy in general and the labor market in particular were more upbeat, and the committee deemed that risks had diminished," Long stated. "Nevertheless, there was no indication that the committee anticipates that inflation will pick up in the near term, which leaves them enough slack to maintain a cautious approach to normalizing rates."
Since the last Fed meeting, the global economy was shaken by the United Kingdom's decision to exit the European Union, however, after some turmoil in the markets, equities in the U.S. have since soared to historic highs.
Meanwhile, Perc Pineda, senior economist at Credit Union National Association (CUNA), said inaction by the Fed confirmed CUNA's view that U.S. economic growth continues to be modest.
"Brexit has had minimal effects on the U.S. financial market so far, the dismal May job numbers were an aberration – given strong job gains in June – and inflation is creeping up, but the uncertainty of the pace of economic expansion has kept the FOMC cautious," he said. "We will know how the U.S. economy has fared recently Friday [July 29] when the second quarter GDP advance estimates arrive."
Last December the FOMC boosted the Fed Funds target rate to a range of 0.25 to 0.5% after keeping them near zero for an unprecedented seven years.
