Did the Fed Forget about Deposits?
Last week Jay Powell mentioned not one word about bank and credit union deposits. Are $13.2 Trillion in deposits not important to the Fed?
Deposit Rates keep falling, yet the Fed thinks rates are OK. What’s right?
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Credit Unions Fall Behind in Deposit Rates with Banks
Lake Forest, IL (November 21, 2019) Two major events in deposit rates have occurred recently with one just in the past 10 days. “In the last week the rate paid on interest checking declined, the first rate change to interest checking in nearly 14 months,” says Michael Moebs, Economist & CEO for Moebs $ervices, an economic research firm tracking deposit rates weekly as part of its ongoing Rate Study. “The last rate change for interest checking was an increase in September 2018 while other rates have been changing almost weekly” observed Moebs, “interest rates are changing like bond and stock prices.“
This week, along with interest checking, rates decreased for retail money market deposit accounts and 6 separate terms of retail Certificates of Deposits (CDs).
Even more significant, total interest expense divided by assets at credit unions fell below banks for the first time since 2007. “This means credit unions (CUs) are not paying as much for deposits as banks,” notes Moebs. “This shift is significant and does not bode well for many CUs. This implies CU growth may be curtailed by the level of interest rates.” READ FULL ARTICLE
Written By: m.moebs
Date Posted: 11/21/2019
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