The news has been in rounds that no sooner banks will start charging for any deposits that are being made if Fed decides to cut any kind of interest rate. It is quite possible that the customers most of them will not be charged, it is possible that some business could be hit by this news.
As per a report forwarded last week, the officials of Federal Reserve have come to a discussion that a key interest rate might be cut on deposit of money and this has raised eyebrows from every corner. Industry experts and analysts still feel that a scenario as such is still doubtful, even though one of the officials feels that certain business might get struck with this deposit fee scheme.
Kristin Lemkau who is the spokeswoman for JPMorgan Chase stated that they had no plan for charging any fee for deposits made by retail customers. At the same time Wells Fargo, Citigroup, SunTrust and Bank of America refused to state any comments on it.
The policy makers of Fed during their meeting held on October 29-30 stated that they might plan to reduce already-meager of around 0.25%, the annual interest rate charged on the money which the banks deposit to the Fed.
But during this meet, one issue which was cropped up was about finding ways to narrow the speed of the economic stimulus program of Fed as the economy progresses but also at the same time signaling the intention of Fed to lower the rates so as to support the recovery.
Also theoretically if the bank interest rates get lessened, this way, they could nudge banks to start lending money rather than piling it up at the Fed. During the meeting, several policy makers felt that a cut in the rate would be a beneficial thought and worth considering at some point of time, even though the benefits were pretty small according to the minutes.
Economist Kris Dawsey in one of the reports stated that the possibility of the cut in interest rate has in some way increased and also feels that Fed will soon decide on not pursuing with it. But there was one rick and that is this move might prompt charges on bank deposits.
But on the other hand, analyst Jeff Harte states that a new fee to be introduced was pretty much unlikely to happen, as banks in several ways depend on deposits which helps it to finance loans, and this is a kind of benefit that will eventually be very significantly noted as the economy gradually heats up. Also banks depend on deposits so as to sell several kinds of services to customers such as car loans, etc.