The Scenario Nobody Talks About
ALM | Interest Rates | Deposits | Loans
In the asset/liability management business, we spend a lot of time running “what ifs.” These are scenarios that make us think, analyze risk return trade-offs, and build game plans to reduce the risk of major fluctuations in net interest margin and overall earnings. Odds are the worst scenario is one that ALCOs look at each quarter: falling rates.
From the Editor
What goes up must come down
As we reach the halfway mark in 2022, it’s truly remarkable how much interest rates have increased. The FOMC has increased rates by 150bps to date, and the 10YR UST has essentially doubled. And it certainly feels like market sentiment is that they will continue to rise.