Banks raise CD yields as competition and loan demand increase
Updated
Updated · CNBC · May 7
Banks raise CD yields as competition and loan demand increase
6 articles · Updated · CNBC · May 7
In April, eight of 35 banks tracked by Morgan Stanley lifted rates, pushing one-year-or-less CDs up 6 basis points to 3.71% and 13- to 36-month terms up 1 basis point to 2.62%.
Analyst Manan Gosalia said stronger loan growth and a more uncertain interest-rate path are intensifying competition for deposits, helping banks absorb higher funding costs through improved net interest income.
With the Federal Reserve holding rates steady and officials resisting signals of cuts, Morgan Stanley expects CD yields to stay flat or edge higher, though returns still may not outpace inflation.
As banks pay more for deposits, how will this 'deposit war' ultimately impact the cost of future loans and mortgages?
With Mideast tensions driving inflation, are rising CD rates a safe haven or a temporary fix for a volatile global economy?
Is the banking sector's fierce competition for deposits a sign of economic strength or a warning of hidden financial stress?