Fed Funds rates are leveling off in a higher-for-longer range, but quantitative tightening continues. In this environment, commercial banks will have to balance the difficult tradeoff between deposit levels and deposit costs.

Even though the Fed sat out hiking rates during the June meeting, commercial customer behaviors didn’t miss a beat.

In the immediate aftermath of the failures of Silicon Valley Bank (SVB) and Signature Bank (SBNY) in March, commercial deposit markets experienced higher volatility, flight to perceived quality and an increase in flows to money market mutual funds.