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CU System
Corporate advises CUs to look to longer-term CDs
MIDDLETOWN, Pa. (12/13/07)--In the wake of Tuesday’s Federal Reserve decision to cut the Fed Funds rate by a quarter percent to 4.25%, a corporate investment officer indicated that there was general dissatisfaction in the market with the move, but added that credit unions should look to longer-term certificates of deposit (CDs) to bolster their financial future. Brad C. Stewart, vice president/chief investments officer at Mid-Atlantic Corporate FCU in Middletown, Pa., told the Pennsylvania Credit Union Association that the investment markets were disappointed that the Fed Funds rate cut wasn’t bigger (Life Is A Highway Dec. 12). Stewart advised credit unions to:
* Look into a longer term (one to-two-year) CD, since current CD rates are higher than overnight rates, which should decline heading into the new year; and * Follow your investment policy, and review it regularly. It’s not necessary to change it, but now is a good time to examine the safety, liquidity and yield principles behind members’ current policies.
Credit unions usually are slow to re-price rates to their members on both sides of the balance sheet, Stewart added. He said he anticipates lower interest rates throughout 2008 and urged credit unions to examine their current interest-rate mix for 2008.
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