Banks and interest rates
Low interest rates are squeezing banks' profits. Higher ones may do the same
BE CAREFUL what you wish for. Bankers in the rich world have moaned incessantly over the past few years about how low interest rates are squeezing the life out of the banking system. Now that long-term interest rates have risen in anticipation of the Federal Reserve's "tapering" of asset purchases, and changes in short-term rates seem closer than they once did, some are wondering whether higher rates are all they are cracked up to be. Rising rates may restore banks' profitability but too sudden an increase may damage their health.
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