Bank Nerd Corner What Banks Need to Know About the End of Quantitative Tightening
Nov 20, 2025
Join Adam Mustafa, the President and CEO of Invictus Analytics, as he explores the shifting landscape of community banks amidst Federal Reserve changes. He breaks down the end of quantitative tightening and its implications for bank liquidity and deposit strategies. Discover the mechanics of how QE and QT affect stronger versus weaker banks. Adam also discusses the political dynamics influencing the Fed and offers strategic advice for banks on pricing relationships and long-term funding solutions. A must-listen for bank enthusiasts!
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Political Pressure Reshaped Fed Dynamics
- President Trump is acting like an activist investor at the Fed, placing directors to disrupt and influence policy.
- Adam Mustafa says this creates unusual dissension and theatrical pressure around rate decisions.
Cuts Matter More In Direction Than Size
- The recent 50 basis points of cuts this year are modest in isolation but matter cumulatively with prior cuts.
- Mustafa highlights uncertainty about future cuts because inflation remains above target near 3%.
Rate Moves Help Weak Banks More
- Rate moves help weaker banks more when rates fall because they rely on expensive market funding.
- Strong banks with sticky core deposits gain less from falling rates and can see spreads compress.