Deposit repricing since 2020

When the Fed moves, deposit costs follow, but not all the way and not all at once. How far they follow is the beta. How long they take is the lag. Every ALM model makes an assumption about both. This page looks at what one bank's history implies.

Pick a deposit type above. Each one tells its own story: transaction accounts, savings/MMDA and time deposits rarely move together.

Reading the table: each column is the change in basis points between two of the quarters shown, and the last column is the level in the latest quarter. Market rates are on top, the bank's costs below. The chart under it follows Fed funds against the deposit type you picked.

Then walk the cycle: Rising, Plateau, Falling, and the Full cycle in one view.

2021Q4 to 2023Q3

The Fed took its target from 0.25% to 5.50% in six quarters. Deposit costs rarely keep pace on the way up. Look at where this cost started, where it ended, and when it began to move.

2023Q3 to 2024Q3

Rates held at the top for a year. The Fed stopped; did this cost? Any rise here is the lag showing up: the cost still moving after the Fed stopped.

2024Q3 to 2026Q2

The Fed cut from 5.50% to 3.75%: cuts in late 2024, a pause through the first half of 2025, then more cuts in late 2025. On the way down, the question turns around: how much of the rise came back off, and how quickly?

2020Q3 to 2026Q2

The floor, the quarter before liftoff, the peak, and the end of the cycle. Seen this way, each leg of the cycle is one jump, and the difference between the up beta and the down beta is plain.

In 2026Q3 the Fed raised its target to 4.00%, its first increase since 2023Q3. Longer rates rose first: the 2-year and 10-year were already up about half a point by then. The 2026Q3 Call Report will show only the end of the quarter at the higher rate; 2026Q4 will be the first full quarter.

The last cycle is the best evidence of how this bank's deposits behave. Before assuming a beta or a lag for the next one, compare them with what this history implies.

Questions for ALCO

• How does the beta your ALM model assumes compare with what this bank's history implies?
• How much of the cuts made it into deposit costs, and what does that mean now that rates are rising?
• Do non-maturity deposits behave like stable funding here, or have they repriced quickly?
• With rates rising again, which deposits would the bank reprice first, and by how much?
• Would the bank match a competitor's rate, or let some balances go?