Key Charts - Size and Structure
U.S. Banks Squeezed by Interest Rate Disparity
- While short-term interest rates have risen in anticipation of Fed tightening, longer-term yields have fallen, indicating more tepid growth prospects than previously hoped.
- This flattening of the yield curve spells trouble for banks’ net interest margins, which already fell to historic lows in the fourth quarter of 2014.
- Bank executives hope any decision by the Federal Reserve to raise interest rates is inspired by strength in the U.S. economy as opposed to stymieing unwanted outcomes like a spike in inflation.