Bank earnings could take a 10% hit if the Fed cuts rates by 75 basis points by 2020, according to Bank of America Merrill Lynch.
Large-cap banks could see their earnings on a per share basis decline by 10% on average if the Fed cuts rates by 75 basis points, according to Bank of America Merrill Lynch.
Traders are pricing in a more than 90% chance of a September rate cut and about 60% probability of three rate cuts this year.Brendan McDermid | Reutersfor several rate cuts this year to salvage an economy they see set to slow significantly because of worsening trade disputes. The market cheered this week when Fed Chairman Jerome Powell opened the door to the possibility.
Bank margins could take a hit if they are paying out deposit rates at a higher level than market rates. Their earnings are also hurt when the spread between short-term and long-term rates flattens, a phenomenon that could worsen if the Fed cuts.
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