Reduces funding costs
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Inflation Expectations, Interest-Rate Volatility, and Considerations for Funding
Operation Epic Fury in Iran has coincided with a surge in oil price volatility, a widening of Treasury Inflation-Protected Securities (TIPS)-implied breakevens, and an increase in Treasury yields, particularly at the front end of the curve. Depository institutions should review their assumptions about the distribution of interest-rate outcomes this year and consider how they are positioned to perform if interest-rate volatility continues to trend upward. FHLBank Boston can help banks and credit unions maintain funding stability and balance sheet resilience amid rising-rate uncertainty.
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Strategic Implications of Commercial Real Estate Loan Repricing Wave
Over the next two years, commercial real estate (CRE) loans originated from 2020 through 2022 will reprice into a very different rate and macro environment. How that repricing wave affects debt-service coverage ratios (DSCRs), valuations, earnings, and capital, and putting the right credit, liquidity, and funding strategies in place – including leveraging FHLBank Boston products – while the planning window is still open is crucial.
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Advance Solutions for Funding Construction Lending
Utilizing advances for construction loans can keep interest-rate and liquidity risks manageable and align funding with the characteristics of the loans.
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Deposit Costs and Gradual Policy Rate Reduction
Bank deposits exhibit convexity. How effectively a depository can pass on changes in Federal Reserve policy rates to customers is influenced by how quickly the policy rate shifts. The current rate-cutting cycle differs from 2020 because rates are higher, and the pace of rate cuts is more gradual and predictable. With the Fed signaling a slower pace of rate cuts, it may be appropriate for members to consider the relative costs of all available funding sources, including FHLBank Boston advances.
