U.S. banks lost a record $370 billion in deposits last quarter, fueling debate about the Fed’s inflation-calming moves
is taking some of that money out of the system, in part by decreasing demand for loans and increasing demand for government bonds.this year, banks expected—and wanted—some customers to move their money to places offering higher interest payments, such as government bonds.
As recently as April, many analysts scoffed at the idea bank deposits could decline this year. But the Fed’s pace of rate increases has been faster than expected, and the effect on deposits is more pronounced.tighten monetary supply and slow the pace of inflationStimulus programs during the pandemic nearly tripled the amount of reserves commercial banks hold at the Fed.
Complicating forecasts is a $2.2 trillion Federal Reserve Bank of New York program where investors park cash, which has held steady despite rising rates. That money is largely
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