CUNA Research: Consumer Spending Will Slow Due to Interest Rate Hike
Federal Reserve is expected to raise rates several times this year
FOR IMMEDIATE RELEASE
March 16, 2022
Washington, DC
Credit Union National Association (CUNA) Senior Economist Dawit Kebede, PhD, issued the following statement following the Federal Reserve meeting today:
“As expected, the Federal Reserve increased the federal funds rate by a quarter basis point today. It also revised its projection for year-end Personal Consumption Expenditure (PCE) inflation from 2.6% in December to 4.3%. Strong demand, enduring supply bottlenecks, and the surge in energy prices due to the war in Ukraine are contributing to inflationary pressure.
“As a result, The Federal Reserve signaled multiple hikes to federal funds rate throughout the year projecting it to reach 1.9% by the end of 2022 - revising its December projection by a full percentage point. This will raise consumers' cost of borrowing and slow down spending. Consumer spending contributes to two-thirds of the gross domestic product (GDP) - the value of all goods and services in the economy. The GDP growth projections will also decrease with the rising federal funds rate.”
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Credit Union National Association (CUNA) is the only national association that advocates on behalf of all of America’s credit unions, which are owned by 130 million consumer members. CUNA, along with its network of affiliated state credit union leagues, delivers unwavering advocacy, continuous professional growth and operational confidence to protect the best interests of all credit unions. For more information about CUNA, visit cuna.org. To find your nearest credit union, visit YourMoneyFurther.com.
CONTACT:
Deshundra Jefferson
CUNA Communications
(202) 809-4081