A report last week that Federal Reserve officials have discussed cutting a key interest rate has raised the once-unthinkable possibility that banks could respond by charging customers for deposits.
Analysts and industry representatives say such a scenario is highly unlikely, though one official says certain businesses could be hit with deposit fees if the Fed actually cut the rate, which at least for now appears far from certain.
"We have no intention of charging for retail customer deposits," says JPMorgan Chase spokeswoman Kristin Lemkau.
At its Oct. 29-30 meeting, Fed policymakers raised the possibility of reducing the already-meager 0.25% annual interest rate on money that banks keep at the Fed, according to meeting minutes released last week. The issue arose during a discussion about how to taper the pace of the Fed's economic stimulus program as the economy improves while also signaling the Fed's intention to keep rates low to further support the recovery, the minutes said.
Trimming the interest on excess bank reserves also theoretically could prod banks to lend their money instead of parking it at the Fed. At the meeting, "most" policymakers thought a cut in the rate "could be worth considering at some stage," though the benefits "were generally seen as likely to be small," according to the minutes.