How American banks are responding to rising interest rates
Investment banks are struggling, but consumer lending is holding up—for now
![MIAMI, FLORIDA - JULY 18: A customer uses a Bank of America ATM machine on July 18, 2022 in Miami, Florida.The company reported that profit fell 34% to $5.93 billion, or 73 cents per share, for the quarter ended June 30. (Photo by Joe Raedle/Getty Images)](https://www.economist.com/cdn-cgi/image/width=1424,quality=80,format=auto/media-assets/image/20220723_FNP003.jpg)
In january investors expected the Federal Reserve to raise interest rates to just 0.75% by the end of the year. Expectations have shifted dramatically since: by late June markets were expecting rates to hit 3.5% by the end of 2022. This change in expectations is far bigger than the actual move in interest rates, which have climbed by 1.5 percentage points. The impact of this duality—that expectations have leapt while reality has only hopped—was plain to see on July 14th, 15th and 18th as America’s six largest banks, Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo, reported earnings for the second quarter.
This article appeared in the Finance & economics section of the print edition under the headline “Bittersweet”
Finance & economics July 23rd 2022
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