Maintaining resilience in a rising rates environment: addressing ALM uncertainties

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During periods of economic volatility, financial institutions often confront multiple, uncertain paths. Market signals can at times be confusing, and executives must consider a broad range of variables that may impact the income statement and balance sheet in a variety of ways.

 

Currently, we are at what economists call an “inflection point” in the business cycle. Key indicators, such as a peaking Home Price Index, rapidly rising inflation, and rising short and long term interest rates are all pointing toward an economic slowdown—and possible recession—in 2023.

 

Executive management’s ability to assess and answer complex questions pertaining to the balance sheet is directly correlated with the institution’s resilience in times of stress. To be able to answer these questions, ALM executives must effectively collaborate across functions and consider layered levels of assumptions and variables simultaneously. This approach will help your institution navigate a wide range of economic challenges, such as those we are experiencing today.

 

Looking for more asset liability management and pricing strategies to help your institution navigate the rising rate environment? Download our latest whitepaper, “Maintaining Resilience in a Rising Rates Environment: Addressing ALM uncertainties during inflection points in the business cycle.”