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Fitch: US interest rates will normalize faster than consensus expectations - Reuters
In a recent report, titled 'U.S. Bank Deposit Competition to Remain Benign', Fitch Ratings Agency said that most U.S. banks should be able to keep deposit costs at very low levels through 2017, even after two Fed rate hikes since December and another one expected this year.
Key quotes (via Reuters):
- Most banks will likely wait for loan growth to pick up before making any meaningful change to offered rates
- Deposit costs have moved little despite the Fed Funds target rate being raised a cumulative 75bps to 1.25% since December 2016
- We maintain our view that U.S. interest rates will normalize faster than consensus expectations and that the latest rate hike on June 14 underscores that the Fed is on-track for an additional 25bps hike by end-2017 with continued steady increases in 2018 and 2019
- Rising deposit costs, in the context of broader rate normalization, should not have a major credit or ratings impact
- Rising interest rates should generally benefit bank earnings
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
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