Cost of Funds Pressure

 

December 2017

 

Financial institutions have had success in keeping their cost of funds in check even after the Federal Reserve has raised short-term interest rates over the past few years. However, many financial institutions continue to use the same deposit betas in their interest rate risk modelling and financial forecasts that they utilized prior to the Federal Reserve rate hikes. The fact that these deposit betas have not been realized has been a large benefit to the financial institutions’ bottom lines.

 
 
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