Deposits

During the height of the pandemic, banks were facing a withdrawal of deposits. Currently, some financial institutions are offering higher interest rates to maintain their cash flow. On January 27th, borrowing in the federal-funds market reached $120 billion, the highest amount recorded in Federal Reserve data since 2016. The central bank’s recent hike in interest rates has caused a surge in activity in the fed funds market, which is utilized by banks and government-backed lenders to exchange their cash reserves held at the Fed. Certain banks are in a rush…