How we measure deposit pricing
Four measures, defined once and used the same way wherever they appear in our research or in Vira. Each has one definition and the same name every time. Here is what each one means, and what it does not claim.
- Shrug ZoneAudare AI term
The band of rates around the market median for one product in one market within which a rate reads as in line with the market. Its two edges are the Switch Lines.
What it is for. A rate inside the zone is in line with the market. A rate outside it stands apart, and standing apart is a choice with a price: above the zone it pays for attention; below it, it saves money and puts some balances at risk. The zone tells a pricing committee which of its rates are choices of that kind.
What it does not claim. It does not say customers ignore differences inside it. It says only that a rate inside the zone does not stand apart from what the market offers.
- Switch LinesAudare AI term
The two edges of the Shrug Zone: the rates at which a product stops reading as in line with the market. The upper Switch Line is where a rate starts to stand out above the market; the lower one is where it starts to stand out below.
What it is for. The distance from a posted rate to the nearest Switch Line is the smallest move that changes how the rate reads. It answers two questions in one: how far is the rate from standing out, and what would it take to get there.
- Full Reprice CostAudare AI term
The yearly cost of a rate change, counted on every balance the change reaches, not only on the new money it is meant to win.
Worked example, illustrative numbers onlyA savings product holds $200 million. Raising its rate by 0.25 percentage points to bring in $10 million costs $500,000 a year on the money already there, plus the interest on the new $10 million. At a new rate of 3.25%, that is $325,000. The Full Reprice Cost is $825,000 a year, not $325,000. That is the number to compare with every other way of raising the same $10 million.
What it does not claim. It is the cost side only. Whether the move is worth it depends on what the new money is worth to the institution and whether it arrives, which is a forecast. The cost is arithmetic on the institution's own balances, and it should be known before the forecast is argued.
- Pass-Through DaysAudare AI term
The number of days between a Federal Reserve rate decision and the date an institution's posted rate for a product first changes.
Counted from the date of the decision to the first date a new rate appears on the institution's published rate page.
What it is for. It shows who moves first and who waits, product by product. Moving later after a cut keeps savers on the higher rate longer; moving later after a rise can cost the institution balances.
What it does not claim. It counts posted rates. It does not see exceptions priced by a banker at the desk, or rates offered only inside online banking.