How are banking products potentially impacted by the Fed Funds Rate?
Video Transcript
Many clients are wondering how the Fed Funds rate increase will impact their bank products – and the simple answer is: “It depends.” Now that the Federal Reserve has increased the Fed Funds rate, not all banks have increased their loan and deposit rates by the same amount or at the same time. Each institution has its own strategy for which rates they move and when, based on the competitive environment, the bank’s mix of loans and deposits and other factors.
At U.S. Bank, we review four key areas when establishing our rates: the competitive environment, balancing the bank’s deposits and loans, asset and liability positions, the treasury yield curve and the Fed Funds rate itself. We are consistently analyzing our product pricing strategy to take into account our customers’ best interest, the needs of our business and regulatory requirements.
Now may be a good time for you to review deposits, investments, upcoming credit and other financial needs. Keep in mind two key words – slow and gradual – we do not expect rates to move up quickly. Consensus is that even by the end of 2016, rates will remain very low relative to historical levels. But that doesn’t mean clients should ignore this rate increase. We encourage clients to work with a banker who can help answer questions about the impact of the rate change on current and future financial goals.
Disclosures:
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Investment products and services are:
Not a deposit • Not FDIC insured • May Lose Value
Not bank guaranteed
Not insured by any Federal Government Agency
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This information represents the opinion of U.S. Bank and was filmed in October 2015. Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. Mortgage and Home Equity products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association, Member FDIC.
U.S. Bank and its representatives do not provide tax or legal advice. Each individual’s tax and financial situation is unique. You should consult your tax and/or legal advisor for advice and information concerning your particular situation.
The information is not intended to be a forecast of future events, a guarantee of future results, or investment advice. It is not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Investors should consult their investment professional for advice and information concerning their particular financial situation.
Equal Housing Lender. Credit products are offered by U.S. Bank National Association and subject to normal credit approval. Deposit products offered by U.S. Bank National Association. Member FDIC.