Perfecting Deposit Pricing in Rapid Rising Rate Environments

Published on January 19, 2023

Retail banks around the world are grappling with rising interest rates, slowing economic growth, and market conditions that will pressure margins in the months ahead. How should banks approach deposit cost management to protect growth and profitability?

Interest rates are rising fast and furious as central banks in developed markets scramble to slow historic levels of inflation.

The US Federal Reserve has lifted interest rates from near zero at the start of the year to between 3.00 percent and 3.25 percent in September. US Fed Funds rate is forecasted to rise above 4.5 percent in 2023. This will be one of the fastest paces of rate hikes in decades. Central banks in Switzerland and UK, and the European Central Bank (ECB) have all raised rates since January to counter runaway inflation. In the case of the ECB, a 50-…

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