First Horizon CEO's Caution on 2025 Interest Rate Cuts: A Pragmatic Stance Amidst Uncertainty

First Horizon Corporation's CEO, Bryan Jordan, has expressed a cautious stance on interest rate cuts in 2025, acknowledging the challenges and uncertainties that banks face in a competitive marketplace with ongoing deposit cost pressures and a potentially slower economic recovery. As the global economy continues to grapple with various headwinds, Jordan's pragmatic approach reflects the need for banks to navigate the complexities of a changing financial landscape.



Deposit cost pressures have been a significant concern for banks in recent years, with aggressive Fed rate hikes prompting depositors to seek higher compensation. This pressure has led to increased deposit costs for banks, which can negatively impact their profitability. In addition, the competitive nature of the banking industry makes it difficult for banks to pass on interest rate cuts to their customers, as they may face pressure from competitors to maintain their own interest rates.

Moreover, even if the Fed does cut rates, it's more likely to lower them incrementally rather than slash them. This leaves room for depositors to notice that their banks could be paying them more, potentially leading to increased pressure on banks to raise deposit rates. This risk is further compounded by the potential for slower economic recovery, which could lead to continued uncertainty and caution among banks.

First Horizon's strategic moves to mitigate risks associated with interest rate cuts could involve diversifying funding sources, managing deposit betas, optimizing asset-liability management, expanding non-interest income, strengthening risk management, and adapting to a lower-rate environment. By implementing these strategic moves, First Horizon can better position itself to navigate the challenges associated with interest rate cuts and maintain its profitability.

In conclusion, First Horizon's CEO, Bryan Jordan, has expressed a cautious stance on interest rate cuts in 2025, acknowledging the challenges and uncertainties that banks face in a competitive marketplace with ongoing deposit cost pressures and a potentially slower economic recovery. By adopting a pragmatic approach and implementing strategic moves to mitigate risks, First Horizon can better navigate the complexities of a changing financial landscape and maintain its profitability.