Hopes that a pause in interest rate hikes would end upward pressure on deposit costs have failed to materialize so far.
And even with Federal Reserve officials signaling a more accommodative stance over simmering trade tensions, bank executives are cautious about the prospect that rate cuts would deliver immediate relief based on historical experience.
In a report in May, the bank analytics and advisory company Novantas said that data it collects on about $3 trillion in deposits show that churn — or the proportion of portfolios switching to higher-rate accounts — jumped in 2018 and has remained elevated. “That churn is a big piece of what drives ongoing” increases in deposit costs despite flat rates, Adam Stockton, a director at Novantas, said in an interview. “That’s customers switching from standard products into promo products, and customers looking to maintain promo rates on an ongoing basis.”