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CEOs Another small rate cut in members best interests
KEY WEST, Fla. (1/28/08)--Attendees at last week’s 2008 CEO Summit were asked to act as if they were members of the Federal Open Market Committee and determine whether another federal interest rate cut should be made this week. Steve Rick, senior economist at the Credit Union National Association, asked credit union CEOs attending the question and got a consensus response. After CEOs reviewed various economic indicators, they agreed another small rate cut would be in the best interests of members, credit unions and the overall economy (Life is a Highway Jan. 25). Another cut would help the economy make a “soft landing” of slower growth but not a deep recession, the CEOs reasoned, the Pennsylvania Credit Union Association reported. Economists expect an increase in deposits as members leave the equity markets for the safety and stability of credit union share certificates, Rick told attendees. Loan growth will not be as steep, although a decrease in long-term rates may drive some growth in mortgages, he added. The interest-rate margin is not expected to improve significantly, and credit unions will continue to need non-interest income to fully cover expenses, Rick said.
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