Published 9:46 AM EDT Sep 11, 2019
Could a revival of near-zero interest rates mean new fees for bank customers?
The head of the nation’s largest bank raised that prospect Tuesday.
An industry conference, Jamie Dimon, CEO of JPMorgan Chase, said bank officials have begun discussing which fees and charges it could add if interest rates slide to zero or even lower, according to the Wall Street Journal. Low rates mean narrower margins for banks as they pay interest to consumers for their deposits and use the money to make loans at higher rates.
At a Barclays conference this week, banks such as JPMorgan, Wells Fargo and Citigroup and J.P. Morgan have warned investors that their profits from loans would be less than anticipated the second half of the year because of low rates.
Dimon said he wasn’t expecting zero rates, at least for now, but some economists have raised the idea of zero and even negative rates in the U.S., as some central banks in Europe have done. The talk illustrates how dramatically the economic backdrop has changed since last year.
On Wednesday morning President Trump cited zero or negative rates as he ratcheted up his campaign to browbeat the Federal Reserve into cutting its benchmark rate more sharply. In a tweet, while calling Fed policymakers “boneheads,” Trump said, “The Federal Reserve’s should get our interest rates down to ZERO, or less.”
The Fed lowered its key interest rate by quarter percentage point in July and it’s expected to cut the rate again next week to a range of 1.75% to 2%. Last year, the central bank raised rates four times, capping nine rate hikes since late 2015 amid an improving economy.
Pouring it on: President Trump rips Fed as ‘Boneheads,’ calls for zero or negative interest rates