Amid an environment of rate cuts by the Federal Reserve, a predictable shift is anticipated among U.S. banks towards higher-yielding investments. This monetary policy change can reduce the returns on traditional interest-based products and service revenues, like lending products, which normally constitute a significant share of bank income.
This is primarily because a bank’s revenue is directly affected by interest rates. When the Fed cuts rates, banks’ net interest margin — the difference between the interest they earn on assets like loans and the interest
