Data this past week generally portrayed the ongoing trend of elevated prices (Empire State manufacturing and Philadelphia Fed Business survey prices up), stable labor markets (improved jobless claims), and relatively decent overall economic activity (retail sales sturdy) except for the housing sector (lower sentiment/starts/permits). The Mideast situation lingers and continues to potentially underpin commodity prices and inflation. Indeed, using one of its only levers for quelling inflation forces, the Fed pulled the trigger on an as-expected 25-bps rate hike this past week. The Fed’s fresh Summary of Economic Projections (SEP, aka “dot plot”), moreover, reflects that the hike is likely not a “one-and-done”. The median projection for end-2026 shows another 25-bps hike before a holding period throughout 2027 to be followed by a few cuts in 2028-2029. The longer-run level for the appropriate fed funds rate was marked up from 3.0625 to 3.25%. The market, in comparison (as of midday Thursday), prices for just shy of three 25-bps hikes by September 2027. The week ahead is relatively light on economic data but offers a plethora of Fedspeak...

Tune in for a thought-provoking discussion with Frank Farone, Managing Director at Darling Consulting Group, on how community financial institutions can evaluate the true cost of funds, challenge common misconceptions about wholesale funding, and develop a more effective approach to liquidity, profitability, and balance sheet management...

After years of anticipating a return to lower interest rates, many financial institutions have come to recognize that rates may remain elevated for longer than originally expected. While a higher-for-longer environment presents challenges—including deposit competition, funding pressures, slower loan demand, and margin compression—it also creates opportunities for well-positioned institutions to enhance earnings, strengthen liquidity, and support strategic growth...