--- title: Deposit Pricing Strategies in a Rising Rate Environment description: Interest rates in 2022 are expected to rise faster than in the previous decade. Is your bank prepared to react? image: https://go.nomissolutions.com/hubfs/_blog%20graphic/blog-rising-rates.png --- [![Nomis Solutions](https://go.nomissolutions.com/hs-fs/hubfs/raw_assets/public/NomisSolutions_August2021/images/nomis_48d86813.png?width=2000&height=44&name=nomis_48d86813.png "Nomis Solutions")](https://nomissolutions.com/#) - SOLUTIONS - RETAIL BANKING - [Nomis Price Optimizer](https://nomissolutions.com/nomis-price-optimizer/) - [Nomis Price Manager](https://nomissolutions.com/nomis-price-manager/) - [Nomis Deal Manager](https://nomissolutions.com/nomis-deal-manager/) - RESOURCES - INSIGHTS - [Content Library](https://nomissolutions.com/content-library/) - [Press Center](https://nomissolutions.com/press-center/) - [The Nomis Narratives Blog](https://go.nomissolutions.com/the-nomis-narratives-blog) - [Video Gallery](https://nomissolutions.com/video-gallery/) - COMPANY - OUR STORY - [About Nomis](https://nomissolutions.com/about-nomis/) - [Careers](https://nomissolutions.com/careers/) - [Meet The Team](https://nomissolutions.com/meet-the-team/) - SOLUTIONS - RETAIL BANKING - [Nomis Price Optimizer](https://nomissolutions.com/nomis-price-optimizer/) - [Nomis Price Manager](https://nomissolutions.com/nomis-price-manager/) - [Nomis Deal Manager](https://nomissolutions.com/nomis-deal-manager/) - RESOURCES - INSIGHTS - [Content Library](https://nomissolutions.com/content-library/) - [Press Center](https://nomissolutions.com/press-center/) - [The Nomis Narratives Blog](https://go.nomissolutions.com/the-nomis-narratives-blog) - [Video Gallery](https://nomissolutions.com/video-gallery/) - COMPANY - OUR STORY - [About Nomis](https://nomissolutions.com/about-nomis/) - [Careers](https://nomissolutions.com/careers/) - [Meet The Team](https://nomissolutions.com/meet-the-team/) # The Nomis Narratives --- ##### Join The Nomis Narratives ##### Latest Posts ##### [Build vs. Buy: Why the Conversation has Changed](https://go.nomissolutions.com/the-nomis-narratives-blog/build-vs.-buy) Ten years ago, the build versus buy conversation... ##### [Beyond Surface Yields: A Complete Framework for Auto Loan Profitability](https://go.nomissolutions.com/the-nomis-narratives-blog/auto-loan-profitability-framework) The Experience Advantage After 20 years of... ##### [The Multibillion Wake-Up Call: Why Banks Must Evolve Beyond Basic A/B Testing](https://go.nomissolutions.com/the-nomis-narratives-blog/evolve-beyond-basic-a/b-testing) While banking executives debate IT budgets and... ##### [Building a Voice-Enabled Mortgage Assistant in Four Hours: A Lesson in Compound AI Systems](https://go.nomissolutions.com/the-nomis-narratives-blog/voice-enabled-mortgage-assistant) Most groundbreaking banking technology stories... ## Deposit Pricing Strategies in a Rising Rate Environment ##### Retail Banking, Price Optimization | Jan 19, 2022 [![Share on linkedin](https://7528302.fs1.hubspotusercontent-na1.net/hub/7528302/hubfs/raw_assets/public/mV0_d-web-default-modules_hubspot/img/linkedin-color.png?width=24&name=linkedin-color.png)](http://www.linkedin.com/shareArticle?mini=true&url=https%3A%2F%2Fgo.nomissolutions.com%2Fthe-nomis-narratives-blog%2Fdeposit-pricing-strategies-in-a-rising-rate-environment%3Futm_medium%3Dsocial%26utm_source%3Dlinkedin) [![Share on twitter](https://7528304.fs1.hubspotusercontent-na1.net/hub/7528304/hubfs/raw_assets/public/mV0_d-web-default-modules_hubspot/img/twitter-color.png?width=24&name=twitter-color.png)](https://twitter.com/intent/tweet?original_referer=https%3A%2F%2Fgo.nomissolutions.com%2Fthe-nomis-narratives-blog%2Fdeposit-pricing-strategies-in-a-rising-rate-environment%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&url=https%3A%2F%2Fgo.nomissolutions.com%2Fthe-nomis-narratives-blog%2Fdeposit-pricing-strategies-in-a-rising-rate-environment%3Futm_medium%3Dsocial%26utm_source%3Dtwitter&source=tweetbutton&text=) ![Deposit Pricing Strategies in a Rising Rate Environment](https://go.nomissolutions.com/hubfs/_blog%20graphic/blog-rising-rates.png) Current market forecasts suggest that we will soon see Fed funds, and subsequently, retail and commercial deposit rates, rise in 2022. Banks are anxious to see an expansionary rate regime to push open net interest margins and thus, signal the improving demand for loans. Tepid loan demand and rock-bottom margin spreads have been an anchor on bank earnings over the past year and we are collectively anxious to return to a more traditional rate curve. Inflation has been prevalent across news and media headlines lately, and for good reason. Supply chains remain somewhat disrupted due to Covid-19 adaptations, the demand for goods is rising, and there is excess liquidity in the money supply. Together, these three forces are lifting prices higher. On the one hand, recent growth in core consumer prices, commodities, equity values, and real estate prices give concern that the market is exuberant. On the other hand, unemployment remains fluid. The current trajectory of the economy could be an indication that we are getting “back on track. When Will Deposit Rates Rise Again? In one way or another, we all have experienced the effects of an ample money supply and shortages, as well as an increased demand for goods. In its effort to tame inflation at full employment, the Fed is expected to implement a first rate hike of 25-50bps as early as April. In the later parts of 2022, we should see an additional three rate hikes which means the Fed rate is likely to increase by 100-150bps by year’s end. How Can Banks React to Rapidly Rising Rates? Different banks will have varying strategies to react to rising rates depending on their current loan-to-deposit ratios, FTP rates and rate movements of their relevant competitors. While determining the ideal Beta is a tactical decision, all banks should be considering the below strategic factors to prepare themselves for the rising rate environment. - Rising Rate Regime Models - Relationship Pricing - Mining Transactional Data We are poised to enter a rapidly increasing rate environment and it’s clear that waiting for NIM expansion will not improve your bank’s performance today. Dive deeper into this topic by accessing the complete white paper titled: [Deposit Pricing Strategies in a Rising Rate Environment.](https://go.nomissolutions.com/hubfs/Content-Library/White-Papers/Deposit%20Pricing%20Strategies%20in%20a%20Rising%20Rate%20Environment.pdf) [![VIEW WHITE PAPER](https://hubspot-no-cache-na2-prod.s3.amazonaws.com/cta/default/20109104/caf9071f-e388-4625-98de-16003baa9f9b.png)](https://hubspot-cta-redirect-na2-prod.s3.amazonaws.com/cta/redirect/20109104/caf9071f-e388-4625-98de-16003baa9f9b) --- [Back to Blog](https://go.nomissolutions.com/the-nomis-narratives-blog) © 2024 Nomis Solutions | [Privacy Policy](https://nomissolutions.com/global-privacy-policy/)