The impact of interest rate changes on banks depends on each bank's balance sheet structure and its ability to solve evolving asset/liability situations. The likelihood is that interest rates are going to continue rising in the near term because inflationary fears will force the Federal Reserve to exercise a tighter and more consistent monetary discipline. If the Fed doesn't apply such discipline now, it will be faced with the need to jam on the brakes in the future, causing a possibly wrenching rate spike.

Received wisdom tells us that inflation fears always stir up interest rates and harm bank performance. Supposedly, rising rates increase banks' cost of money and crunch earnings.

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