Banks need to be vigilant about keeping a finger on the pulse of their customers’ pricing sensitivities, banking behaviors and switching triggers.
A unique mix of macroeconomic conditions and market dynamics is conspiring to make deposit cost management particularly challenging over the next 24 months. Interest rates are on a fast and furious climb. The target federal funds rate (currently at 2.25% – 2.50%) is expected to finish the year a full percentage point higher as the Federal Reserve battles rampant inflation. The pace of rate hikes is one of the fastest in history.