Exploring the Conundrum of Longer-Term Funding

There is virtually no question about what the Fed is likely to do at their next Federal Open Market Committee meeting. Likewise, there is little debate as to whether the expected Rate increase will be followed by additional Rate increases in the future. The real question for debate is only how high, and how quickly, we might expect these increases to proceed?

​​This has led many to ponder ~ when and how should I begin lengthening my Longer Term Funding, to the extent that this is possible? However, this is not a simple question. In fact, it is a great conundrum for many bankers.

The dictionary defines a conundrum as "a confusing and difficult problem or question."

​This is especially true when the logical answer to a problem is at odds with an answer derived from careful analysis. Such is the case with making decisions related to the value (benefit) of short-term funding versus longer-term funding. Clearly, logic would have us believe that in a rising rate environment, we would benefit from having as much longer-term funding in place as possible. However, as with most things, the devil is in the details... 

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