AFP, New York :
President Donald Trump’s attacks on the US Federal Reserve make financial markets cringe, but his demand for zero interest rates makes banks sweat.
As the Fed reverses course and is poised to cut the benchmark lending rate a second time on Wednesday, large US banks have signaled they expect a bigger hit to their bottom line.
Banks including JPMorgan Chase and Wells Fargo last week trimmed their 2019 forecasts for profits tied to interest rates as central banks around the world loosen monetary policy in response to a weakening global growth outlook.
Lower interest rates mean less profits on loans made by the banks, especially if they have offered higher returns on deposits to attract customers.
Moody’s warned in a report Thursday that lower interest rates would crimp bank profitability in general and prompt more mergers in the industry.
JPMorgan Chase Chief Executive Jamie Dimon last week said the bank now expects full-year net interest income of around $57 million – another downgrade to the forecast that was $58 billion earlier in the year.
The Federal Reserve in July cut the key interest rate – which drives the cost of all types of borrowing – for the first time in more than a decade, after four rate increases last year.
President Donald Trump’s attacks on the US Federal Reserve make financial markets cringe, but his demand for zero interest rates makes banks sweat.
As the Fed reverses course and is poised to cut the benchmark lending rate a second time on Wednesday, large US banks have signaled they expect a bigger hit to their bottom line.
Banks including JPMorgan Chase and Wells Fargo last week trimmed their 2019 forecasts for profits tied to interest rates as central banks around the world loosen monetary policy in response to a weakening global growth outlook.
Lower interest rates mean less profits on loans made by the banks, especially if they have offered higher returns on deposits to attract customers.
Moody’s warned in a report Thursday that lower interest rates would crimp bank profitability in general and prompt more mergers in the industry.
JPMorgan Chase Chief Executive Jamie Dimon last week said the bank now expects full-year net interest income of around $57 million – another downgrade to the forecast that was $58 billion earlier in the year.
The Federal Reserve in July cut the key interest rate – which drives the cost of all types of borrowing – for the first time in more than a decade, after four rate increases last year.
