The Fed Raised Rates. Is Your Corporate Cash Keeping Up?

The Federal Reserve raised the federal funds target range by 25 basis points to 3.75%–4.00% on September 16, 2026. Federal Reserve

For treasury and finance teams, a change in the Fed's policy rate should prompt an important question:

What changed for our organization?

A higher federal funds rate doesn't automatically mean your company's deposit rates or Earnings Credit Rate (ECR) will increase by the same amount.

And it doesn't necessarily mean your current liquidity strategy remains optimized.

When the rate environment changes, treasury teams should understand how that change flows through their banking relationships and whether their cash is still positioned appropriately.

A Fed Rate Increase Should Trigger a Liquidity Review

The federal funds rate isn't the rate a corporation earns on its deposits.

However, changes in short-term interest rates can affect the economics banks use to price deposits and other liquidity solutions.

That means a Fed move can be a good trigger to revisit:

• Deposit rates
• Earnings Credit Rate (ECR)
• Operating balances
• Excess liquidity
• Treasury fees
• Interest-bearing accounts
• Sweep structures
• Other appropriate short-term investment options

The objective isn't necessarily to move cash every time the Fed changes rates.

It's to understand whether the economics of your current structure have changed.

Don't Assume Your Bank Will Automatically Adjust Your Rate

One of the biggest mistakes organizations can make is assuming their deposit pricing will automatically remain competitive when market rates move.

Bank deposit rates are not necessarily uniform across every client or every account.

The rate an organization receives can depend on several factors, including its balances, banking relationship, liquidity needs, account structure, and negotiations with its financial institution.

That's why treasury teams should know:

What were we earning before the Fed move?

What are we earning now?

Has our bank adjusted our rate?

How does that rate compare with other appropriate alternatives?

A rate increase in the market creates an opportunity to have that conversation.

Review Your ECR Too

Deposit yield isn't the only rate treasury should evaluate.

Organizations using operating balances to offset treasury management fees should also understand their Earnings Credit Rate.

ECR allows eligible balances to generate earnings credits that can offset qualifying treasury fees.

After a meaningful change in the rate environment, treasury should review:

• The current ECR
• Whether it has changed
• How much balance is required to offset eligible fees
• The value of those earnings credits
• Whether maintaining those balances remains economically efficient

This becomes especially important when an organization has significant liquidity.

The question isn't simply whether ECR is offsetting your fees. It's whether that's still the best use of the cash.

Consider the Opportunity Cost of Cash

Rate changes can make relatively small pricing differences much more meaningful.

Consider an organization with $25 million in excess liquidity.

A difference of just 25 basis points represents approximately $62,500 annually, assuming the balance remains consistent for the year.

A 50-basis-point difference represents approximately $125,000 annually.

And a 100-basis-point difference represents approximately $250,000 annually.

For organizations maintaining substantial cash balances, those differences can quickly become material.

That's why liquidity shouldn't simply be viewed as cash sitting safely at the bank.

Liquidity is an asset, and treasury should understand the return that asset is generating.

Look at Fees and Yield Together

This is also where treasury fee optimization and liquidity strategy intersect.

Some organizations maintain balances primarily to generate ECR and offset treasury fees.

But there may be another strategy worth evaluating.

What if the organization could:

Negotiate treasury fees to competitive market levels, pay those reduced fees directly, and move more excess liquidity into appropriate interest-bearing solutions?

Depending on the organization's fee structure, ECR, available deposit rates, balances, liquidity requirements, and investment policy, that could create a stronger economic outcome.

It won't be right for every company.

But treasury should know the answer.

Don't evaluate what you're paying without also evaluating what you're earning.

Know Where Your Cash Is

Before treasury can optimize liquidity, it needs visibility.

For organizations with multiple banks, accounts, entities, or countries, that can become increasingly complicated.

Treasury should be able to answer:

• Where is our cash?
• How much is required operationally?
• How much is restricted?
• How much is truly excess?
• What is each balance earning?
• Which balances are generating ECR?
• Which balances are earning hard-dollar interest?
• Are there idle balances that could be deployed differently?

This is particularly important for organizations that have grown through acquisitions.

Cash can become fragmented across accounts and financial institutions over time, and what may appear insignificant at the account level can become meaningful when evaluated across the entire organization.

Don't Chase the Highest Rate

A liquidity review shouldn't turn into a race to whichever institution quotes the highest number.

Yield is only one component of liquidity management.

Treasury also needs to consider:

• Safety
• Liquidity
• Counterparty exposure
• Concentration
• Access to funds
• Operational requirements
• Investment policy
• Banking relationships
• Technology and integrations
• Credit considerations

The appropriate strategy should balance return with the organization's operating and risk requirements.

The goal isn't to chase yield. It's to optimize liquidity.

Use Rate Changes as a Reason to Talk to Your Banks

A change in the Fed's policy rate is also an opportunity to engage your banking partners.

Ask them:

How does this rate change affect our relationship?

What happens to our ECR?

What happens to our deposit rates?

Are there other liquidity structures we should be considering?

Are our current balances positioned appropriately?

Those conversations can provide useful information.

But organizations should also have enough independent market perspective to evaluate the answers they receive.

Each bank will naturally approach the conversation through its own products, balance sheet, and relationship strategy.

Treasury's job is to determine what makes sense for the organization.

Establish a Process for Reviewing Rates

Liquidity optimization shouldn't depend on someone remembering to check rates occasionally.

Treasury teams can establish specific triggers for reviewing liquidity.

Those might include:

• Federal Reserve rate changes
• Significant changes in cash balances
• Acquisitions or divestitures
• New debt facilities
• Major capital expenditures
• Changes to investment policy
• Significant changes in treasury fees
• Banking relationship reviews

The exact cadence will differ by organization.

What matters is having a process.

Rate environments change. Your liquidity strategy should be able to change with them.

The Broader Banking Relationship Matters

Deposit rates shouldn't be evaluated in isolation either.

A company may maintain deposits, credit facilities, treasury services, commercial cards, merchant processing, foreign exchange, and other relationships with the same financial institution.

That broader relationship creates value for the bank.

Treasury should understand that value when discussing deposit pricing and ECR.

This doesn't mean every organization should demand the highest rate available in the market.

It means companies should understand the economics of their relationships well enough to know whether they're receiving competitive overall value.

The Bottom Line

The Fed moved rates.

Now treasury should determine whether anything needs to move with it.

That doesn't automatically mean changing banks, moving cash, or restructuring the company's liquidity strategy.

It means reviewing the numbers.

What are you earning?

What is your ECR?

What are you paying in treasury fees?

How much liquidity is truly excess?

And are those economics still competitive in the current environment?

At TreasurySavvy, we believe rate changes should be used as an opportunity to evaluate the broader treasury relationship.

Because when market conditions change, doing nothing should still be an informed decision.

About TreasurySavvy

TreasurySavvy is an independent treasury advisory firm helping organizations evaluate and optimize their banking relationships, liquidity, treasury pricing, commercial card programs, merchant costs, and overall treasury strategy.

We bring independent market intelligence and banking expertise to the client's side of the table, helping treasury and finance teams understand what they're paying, what they're earning, and where opportunities may exist.

Is Your Corporate Liquidity Keeping Up?

If your organization hasn't reviewed its deposit rates, ECR, treasury fees, and liquidity structure following changes in the rate environment, TreasurySavvy can provide an independent assessment of where opportunities may exist.

Contact TreasurySavvy to learn more.

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