Off the Record, On the Issues with John

Inflation slows and a new bipartisan bill targeting payment scams could impact credit unions and their members.

By John Alexander, DakCU Director of Legislative & Regulatory Affairs

Inflation Taps the Brakes
In a surprising turn that defied months of tense speculation, inflation cooled again in May, adding fresh urgency to discussions within the Federal Reserve and sending ripples through the financial sector. According to data released Wednesday by the U.S. Bureau of Labor Statistics, the Consumer Price Index for All Urban Consumers (CPI-U) edged up just 0.1%—a slower climb than April’s 0.2% rise. Over the past year, inflation has held to a modest 2.4%, well within the range economists believe the Fed can live with.

For credit unions across the country and particularly here in the Dakotas this unexpected slowdown may be the calm before a storm of decisions at the Federal Reserve.

But the news isn't just about inflation, it’s about what the Fed does next. The Federal Open Market Committee (FOMC), which has held interest rates steady while it evaluates economic signals, now faces intensifying pressure to cut rates. America’s Credit Unions Chief Economist Curt Long notes that “the steady progression of low inflation readings combined with modest deceleration in the labor market means that pressure is mounting to ease rates.”

This matters deeply for credit unions. Lower interest rates affect everything from mortgage lending to auto loans and savings yields. While Wall Street speculates, credit unions are already positioning themselves to meet the moment.

Senators introduce bipartisan bill to create payment scam task force
With a focus on fighting fraud, a bipartisan, lawmakers introduced a credit union-supported bill Tuesday to establish a task force to combat payment scams. U.S. Senator Mike Crapo, R-Idaho, and U.S. Senator Mark Warner, D-Va., introduced the Taskforce for Recognizing and Averting Payment Scams (TRAPS) Act (S. 2019). The bill would direct the Treasury to establish a task force to examine current trends and developments in payment scams, identify effective methods for preventing such scams, and issue recommendations to enhance efforts to identify and prevent such activities.

The task force composed of representatives from the NCUA, Consumer Financial Protection Bureau, Federal Trade Commission, Department of Justice, Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve, Federal Deposit Insurance Corporation, and Financial Crimes Enforcement Network – would also include a representative from a credit union with expertise in identifying, preventing and combating payment scams.
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