Some Deposit Rates Fall, Yet Some Rise
Savings Rates the Same – Long Term Deposit Rates Fall – Some Rates Rise
Lake Forest, IL (July 9, 2019)
The last decline in deposit rates was August 2013. So, it has been almost six years since deposit rates h
Rates Rumble But Which Way?
ave fallen. Or, more importantly, six years of steady deposit rate increases has ended.
The recent rate drops only impacted long-term deposits with rates on savings and short-term money remaining unchanged. At $2.8 Trillion, long-term deposits only account for 23.8% of all deposits. The rates on the remaining $9.3 T of deposits remain the same.
In response to the recent Federal Open Market Committee (FOMC) meeting and subsequent notice on maintaining the basic Fed Funds rate at 2.40%, long-term CD rates (Certificate of Deposit), six months or longer, have started to decline.
“While the fall in maturities seems slight from 1 basis point (BP) to 4 BP,” notes Michael Moebs, CEO & Economist of Moebs $ervices, an economic research firm, “this is actually quite substantial because it ends a 6-year rise in CD rates. Most notably it signifies a switch in rate direction by the marketplace.”
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