Even if interest rates are bottoming, the normalisation of net interest margins at the three banks may continue through 2026
[SINGAPORE] There was little immediate market reaction last week to minutes of the US Federal Open Market Committee’s Jan 27-28 meeting that suggested “several participants” had the possibility of rate hikes on their minds.
Yet, it may just be a matter of time before the Fed’s apparently shifting view on the appropriate path for the federal funds rate in the months ahead begins colouring market sentiment around the world. Renewed US trade policy uncertainty could further complicate the picture.
In Singapore, a slower pace of Fed rate cuts could have implications for the profitability of DBS, OCBC and UOB – which account for more than half the Straits Times Index (STI).
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