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To Predict Deposit Rates, Take a Look at Jobs Data

American Banker
Many executives dwelled this earnings season on how much high unemployment will hurt their credit outlooks, but the other side of the balance sheet presents a fuller, perhaps more optimistic picture.

Deposit rates may not start rising again until the unemployment rate starts to decline, according to a new study and that probably won’t happen until the latter part of 2010.

If that’s the case, experts say, the prolonged low-rate environment will benefit banks, provided consumers continue to park their money there.

When the unemployment rate is high and economic activity low, the need for deposits to fund loans is less acute, said Dan Geller, an executive vice president at Market Rates Insight, a San Anselmo, Calif., firm that tracks deposit pricing. That means banks can pay

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