The Era of Certainty in Interest Rates is Over

The Era of Certainty in Interest Rates Is Over

In a press conference on May 7, Federal Reserve Chair Jerome Powell made one thing very clear: the path forward for monetary policy is anything but clear.  

Inflation. Tariffs. Geopolitics. Regulatory crosswinds. The Fed held rates steady but admitted it’s essentially in a holding pattern, unable to predict whether the economy will heat up, cool down, or spiral into stagflation. Powell stated bluntly: “It’s really not at all clear what it is we should do.”  

And with that, an era ended.  

Goodbye, Predictability. Hello, Uncertainty.

Just a year ago, interest rate trends felt directional. Strategic planning sessions at banks could reasonably project rate movement based on inflation targets, job data, and economic momentum.  

Now? Those assumptions are gone.  

• Rate policy is frozen.  

• Inflation and unemployment could rise...at the same time.  

• Even the Fed isn’t sure what comes next.  

For bankers and risk leaders, this means one thing: you need tools that see what you can’t.  

Autopilot Pro was built for exactly this kind of moment when looking backward is no longer helpful, and waiting to act is no longer safe.  

What Autopilot Is Actually Watching

While headlines swirl around interest rates and political risk, Autopilot is quietly scanning what matters most: your income statement, asset mix, and balance sheet, and then layering in macroeconomic factors like tariffs, Fed policy moves, and market volatility.

This system gives banks the ability to ask:

• How is loan performance trending beneath the surface?

• Are we underestimating risk based on outdated provisioning?

• How will rising funding costs and margin compression hit us next quarter?

• Are we building resilience or exposure into our portfolio?

Let’s look at real-world examples from Autopilot’s latest EWI outputs.

EWI #1: Loan Portfolio Risk

Delinquencies Rising. Loss Absorption Falling.

• Total 90+ Day Past Due & Nonaccrual: 0.85% — below peers, but rising

• ACL to Nonaccrual Loans fell from 4.26x to 2.83x YoY

• Net Loss to Average Loans is flat at 0.45% — but nearing peer medians

What this means: Surface-level metrics may look stable, but Autopilot identifies a weakening ability to absorb future loan losses, especially in institutions with erratic loan growth or modest provisioning (~0.26%).

Strategy Preview:

• Short-Term: Boost ACL in high-risk segments by 10–15 bps

• Mid-Term: Launch mid-market workout units and expand forecasting models

• Long-Term: Shift toward lower-risk consumer or government-backed loans

EWI #2: Earnings Volatility

Margins Squeezed. Costs Elevated. Growth Stalled.

• NIM flat at 3.10%

• Interest expense up from 1.62% → 2.00%

• Noninterest expense at 2.32% of assets (above median)

• Fee income stalled at 1.30%

Autopilot’s EWI system flags an income structure that’s running harder just to stay in place. This reflects macro-level challenges like inflation-driven OpEx and sluggish loan demand, not just internal inefficiencies.

Strategy Preview:

• Short-Term: Reprice maturing liabilities and limit new OpEx

• Mid-Term: Introduce advisory revenue streams, automate middle-office

• Long-Term: Shift internal capital toward high-ROA segments and fee-based models

EWI #3: Liquidity Strain

Core Deposits Declining. Non-Core Funding Volatile.

• Net Non-Core Funding: –3.08% (vs peer median +5.45%)

• Loan-to-Deposit Ratio: 68.77%, rising

• Non-core short-term funding down –28.79% YoY

• Liquidity from short-term investments down 13.86%

Autopilot detects early-stage liquidity pressure, even as balance sheets appear balanced. This is especially urgent in banks where funding stability is drifting without triggering alerts.

Strategy Preview:

• Short-Term: Launch high-yield sweep accounts to retain top-tier deposits

• Mid-Term: Replace brokered CDs with longer-term insured products

• Long-Term: Build digital onboarding for stable retail growth and expand escrow services

In a world where Powell’s team is on pause, you can’t afford to be.  

With interest rate direction unclear, business confidence is shaken, and policy volatility here to stay, banks must prepare for multiple scenarios simultaneously.  

Autopilot gives you the foresight to act confidently whether rates rise, fall, or stall.  

Ready to see what your next quarter looks like before it hits?

‍