The BOK's recent policy rate cuts—100 basis points since October 2024—have begun to temper inflationary pre

The Bank of Oklahoma (BOK) recently implemented policy rate cuts, with a total reduction of 100 basis points since October 2024. While these cuts aim to mitigate the impact of inflation, they have begun to temper inflationary pressures in the following ways: 1. **Loan Growth and Economic Activity**: The BOK's decision to cut rates has led to a rebound in loan growth, particularly in commercial real estate and core commercial and industrial lending. This increased lending activity can stimulate economic growth, which is crucial for reducing inflationary pressures. 2. **Deposit Pricing and Liquidity**: The BOK has optimized deposit pricing, resulting in lower rates for nonmaturity deposits even without the support of Fed rate cuts. This move enhances liquidity and reduces the cost of funds for borrowers, which can help in managing inflation expectations. 3. **Asset Repricing and Margin Expansion**: The anticipated fund-up of the CRE book and continued strength in the core C&I portfolio are expected to support margin expansion. This expansion can lead to higher net interest income, which is beneficial for managing inflationary pressures by reducing the cost of borrowing. 4. **Fee Income Improvement**: BOK Financial has seen improvements in fee income, supported by normalized trading activity and record performances in several fee-based business lines. This increase in non-interest income can help offset the impact of inflation on net income. 5. **Credit Quality and Provisioning**: The allowance for credit losses remained robust, and charge-off levels were minimal. Strong credit quality and low provisioning needs indicate a healthy financial environment that can withstand inflationary pressures. In conclusion, while the BOK's recent policy rate cuts have begun to temper inflationary pressures, the overall impact on the economy and financial environment is positive. The bank's strategic measures to optimize lending, deposit pricing, and fee income, along with strong credit quality, position it well to navigate the inflationary environment.