The federal funds rate has been top of mind for financial
industry professionals for so long, it is hard to remember a time it was not.
Recent indications that the Federal Reserve will not initiate a rate cut until
the fall, and that may be the only rate reduction this year, have not helped
ease concerns about the implications to the housing market and the economy in
general.
Below are some of the most recent statements from industry
trade professionals regarding the current state of interest rates, as well as
other recent developments at the Fed and other prudential regulators:
MBA’s top economist reacts to FOMC interest rate
projections
Given better-than-expected inflation data in May, Mortgage
Bankers Association (MBA) Chief Economist Mike Fratantoni said it is “perhaps
surprising” the Federal Open Markets Committee (FOMC) does not anticipate more
than a single rate cut this year.
"It is notable that the dot plot indicates it is a
close call between one and two cuts,” Fratantoni said in a statement. “The
tight job market – highlighted again in May’s employment data – is likely
leading many members to continue to be cautious about cutting rates before
inflation is consistently lower. Beyond the projections for 2024, the FOMC also
moved up its projection for the terminal rate, as we expected. Once it
starts, this cutting cycle is likely to be shorter than past cycles.”
Despite the Fed’s announcement, Fratantoni said MBA’s forecast
for mortgage rates will remain the same, as the trade group projects mortgage
rates to drop to about 6.5 percent by the end of the year.
ICBA requests comment extension for Fedwire expansion
proposal
The Independent Community Bankers of America (ICBA) submitted
a request for a 90-day extension to the Federal Reserve’s request for
comment on its proposal to expand its Fedwire Funds Service and National
Settlement Services (NSS) operating hours.
Under the proposal, the Fed would expand the operations of
Fedwire Funds Service and NSS to 22 hours per day, seven days a week, every day
of the year, including weekends and holidays. This would not alter the current
daily operating hours of 22 hours for Fedwire.
In its comment letter, the ICBA argued community bankers
need additional time to assess the implications of such an expanded schedule.
Specifically, the trade group said banks need to consider the impact on
additional financial exchange systems, as well as how the changes would affect
staffing, fraud management, and system maintenance. Read the full comment
letter here.
ACU meets with NCUA official to discuss FOM modernization
Representatives of America’s Credit Unions (ACU) met with
National Credit Union Administration (NCUA) Vice Chairman Kyle Hauptman to
discuss their views on modernizing field of membership (FOM) parameters. During
the meeting, ACU’s Andrew Morris and a group of executives from various credit
unions shared stories about their efforts to add underserved areas to their respective
FOMs, as well as current challenges they are experiencing and suggestions for
making the process of FOM modernization easier. The trade group supports FOM
modernization to allow increased access to credit unions to allow more people
to join and partner with a credit union. Read more about the organization’s
advocacy on this issue here.
Trade groups comment on USPTO’s revised rules
The American Bankers Association and other trade groups
represented in the Quality Patent Coalition expressed support for the United
States Patent and Trademark Office’s (USPTO) revised rules for the Patent Trial
and Appeals Board (PTAB) but noted some areas in need of clarification. The
proposals would codify many existing PTAB practices, narrowing the scope
compared to earlier drafts in response to feedback. The coalition endorsed the
changes, asserting they would improve the handling of discretionary denial
issues and a stricter 325(d) bar. The trades also noted the new rule would
mandate choosing between director review or panel rehearing and would eliminate
the precedential opinion panel review, aligning with the coalition's
preferences. The trades suggested further clarification is needed regarding the
review standard and the precedential nature of director review decisions. Learn
more about the rule and the trades’ comments here.