Fed cut lifts US bank shares; why it matters for Irish investors and businesses
Source: S&P Global Market Intelligence – Insight Weekly (LinkedIn), 23 September 2025
The US Federal Reserve cut its policy rate by 25 bps to 4.00%–4.25% on 17 September, prompting a rally in US bank shares (KBW Nasdaq Bank Index +1.27% on the day). Investors continue to reward banks with lower-cost, stickier deposit franchises, particularly those with higher non-interest-bearing deposits; as of 29 August, these banks traded around 136% of tangible book, roughly 29 pts above peers. Competition for deposits remains tight: 281 banks still offered 1-year CDs above 4% at end-August, though CD balances have begun to ease as a share of total deposits.
Why this is relevant in Ireland
Irish investors with US exposure: A lower Fed rate can support US financials in the near term and may broaden risk appetite. Portfolio rebalancing towards quality US banks could benefit from the current premium on strong deposit franchises.
FX and funding: Fed easing tends to pressure the US dollar versus the euro at the margin. Irish corporates with USD revenues or costs should review hedging; any EUR/USD moves affect translated earnings and input costs.
Cost of capital for Irish multinationals: A gentler US rate path can reduce USD borrowing costs, relevant to Irish PLCs and SMEs with US lines of credit or planned dollar issuance.
Knock-on to Irish/European banks: While the ECB sets euro-area rates, US easing can improve global liquidity and risk sentiment, indirectly supporting European bank equity performance and wholesale funding conditions.
Deposit strategy watch-outs: The US experience underscores the value of stable, low-beta deposits. Irish banks and credit unions can draw lessons on pricing discipline as term-deposit competition evolves here.
Other sector signals from the same report
Loan growth: US bank lending running at ~4.1% YoY (late August).
CRE credit: Non-owner-occupied CRE delinquencies ticked down to ~1.96% in Q2.
Energy & utilities: US power demand aided a summer rebound in selected solar names.
Tech & media: Nearly half of consumers without smart glasses say they’re open to buying within a year.
Metals & mining: Lithium prices could spike again later this decade due to project risks.
Supply chain: Panama Canal transits likely below capacity in 2026, shaping shipping routes and costs.
Reference: S&P Global Market Intelligence, “Insight Weekly” on LinkedIn (23 Sept 2025).