Interest Rates on Checking Accounts Have Not Increased

Apollo Chief Economist

The Fed has been increasing the Fed funds rate, but banks have not increased interest rates on checking accounts and savings accounts, see chart below.

Households that want to benefit from rising short rates need to actively take money out of their bank accounts and into CDs, money market funds, or floating rate credit funds.

The implication for markets is that the transmission mechanism for monetary policy is weaker because the idea with a higher Fed funds rate is to attract money into savings and away from consumer spending.

With very high household savings and very high levels of deposits in banks, this lack of an increase in interest rates on checking accounts and savings accounts is likely a contributing reason why consumer spending is still so strong.

Our weekly Slowdown Watch PDF is linked here.

Chart showing interest rates on checking and savings accounts have not moved much despite a rising Fed funds rate
Source: FRB, RateWatch, Haver Analytics, Apollo Chief Economist. Note: Savings and Checking accounts minimum threshold balance $2,500.

This presentation may not be distributed, transmitted or otherwise communicated to others in whole or in part without the express consent of Apollo Global Management, Inc. (together with its subsidiaries, “Apollo”).  

Apollo makes no representation or warranty, expressed or implied, with respect to the accuracy, reasonableness, or completeness of any of the statements made during this presentation, including, but not limited to, statements obtained from third parties. Opinions, estimates and projections constitute the current judgment of the speaker as of the date indicated. They do not necessarily reflect the views and opinions of Apollo and are subject to change at any time without notice. Apollo does not have any responsibility to update this presentation to account for such changes. There can be no assurance that any trends discussed during this presentation will continue.   

Statements made throughout this presentation are not intended to provide, and should not be relied upon for, accounting, legal or tax advice and do not constitute an investment recommendation or investment advice. Investors should make an independent investigation of the information discussed during this presentation, including consulting their tax, legal, accounting or other advisors about such information. Apollo does not act for you and is not responsible for providing you with the protections afforded to its clients. This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any security, product or service, including interest in any investment product or fund or account managed or advised by Apollo. 

Certain statements made throughout this presentation may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such statements. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology.