Strengthening Economy Presents Opportunities, Risks for Credit Unions

December 2016
Strengthening Economy Presents Opportunities, Risks for Credit Unions

New Video Encourages Credit Unions to Prepare for Rising Interest Rates in 2017

ALEXANDRIA, Va. (Dec. 22, 2016) – Improving labor markets and falling unemployment rates over the past five years have been good for credit union loan growth, according to National Credit Union Administration Chief Economist Ralph Monaco.

Monaco discussed economic conditions and the effect of rising interest rates for credit unions in NCUA’s latest Economic Update video, released today on the agency’s YouTube Channel.

“A solid labor market is very important for credit unions because it means growing loan demand, good loan quality, increased deposits and, potentially, rising membership,” Monaco said. “For credit unions, the outlook for fundamentals like employment and consumer demand should help to support credit union financial performance in 2017.”

However, credit unions should prepare for a continued rise in interest rates.

“The consensus of most analysts is that interest rates, both on the short end of the yield curve and the longer-term rates, are expected to increase,” Monaco said. “Now is a good time for credit unions to re-evaluate what their income and balance sheets might look like under a range of interest rate scenarios.”

Credit unions are encouraged to take advantage of NCUA’s interest rate risk guidance and resource center to help prepare for changes in the new interest rate environment.

NCUA’s Economic Update video series is an ideal information resource for credit union board members, loan officers and management and is available on NCUA’s YouTube channel.

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