...Short-Term Rates Likely to Fall: After gradually raising short-term interest rates, the Federal Reserve's more dovish tone, coming out of the recent Federal Open Market Committee meetings (FOMC), stands in fairly stark contrast to 2018. As such, Fitch Ratings' most recent "Global Economic Outlook" report assumed that the Fed will not raise rates for the rest of 2019. In fact, market participants and even the Fed have discussed the possibility of a rate cut given global economic uncertainty. Recent bank industry commentary has suggested a series of rate cuts will likely adversely impact net interest income; historically, Fed loosening has resulted in net interest margin (NIM) expansion and even quarter-over-quarter increases to net interest income. Flattening Yield Curve Pressures Margins: Fitch expects most of its rated banks to report lower sequential NIMs during 2Q19 earnings season as the Treasury yield curve has notably flattened. Yields on earning assets such as loans and investments,...
