As 2025 winds down, the Catalyst Asset Management team hosted its latest Insights & Outlooks webinar that took a hard look at an economy that’s holding up on the surface – but showing more cracks underneath. Catalyst’s Managing Principal, Mark DeBree, moderated the event and asked in-house experts for their insights ahead of 2026. 

Rate outlooks for the rest of 2025 and Q1 2026

DeBree kicked off the webinar by asking, “Where do you see the target range for the federal funds rate to be at the end of 2026?”

Catalyst’s Senior Investment Officer, John Kirby, highlighted “One thing we're kind of skipping over with the rate outlook is what Chair Powell's done in 2026.” 

“With the external pressure we've seen on the Fed from a variety of sources, it would seem that the new Fed chair coming in would have a dovish tilt and be more incentivized to keep rates in that lower range, he added.”

Strategies for a falling rate environment

On the balance sheet side, Steven Houle, VP of Asset Management, highlighted both opportunity and strategy. “Most credit unions already have down-rate exposure built into their balance sheets. Strategic pricing on real estate can act as a natural hedge, while staying disciplined on spreads and using tools like swaps can help protect earnings on legacy loan portfolios.”

Houle noted that mortgages remain a strong opportunity, either through direct lending or structured products on the investment side. And on the funding side, credit unions need to stay closely aligned on pricing between term and non-term shares.

2026 Projections and perspectives

DeBree closed by asking, “What is one thing credit unions should be aware of heading into 2026?” Catalyst’s Director of ALM, Aaron Martini urged credit unions to use this window to reposition.

“A down-rate environment makes profitability tougher for credit unions. From a risk perspective, liquidity is the first thing that can take you down, then credit and lastly interest rate risk, which may be a slow bleed, but still demands proactive planning,” said Martini.

According to Houle, risks could arise if loan growth outlook isn't very strong for 2026. “We don’t want credit unions dropping rates to drive loan growth because I think that introduces risk on the balance sheet,” he said.

Want to stay ahead of the next shift?

Hear directly from experts like John Kirby, Steven Houle and Aaron Martini during the 2026 Insights & Outlooks webinar series. Register today to stay ahead.