NEW YORK (CNNMoney.com) -- If the outlook for the banking industry worsens in the months ahead, the Federal Reserve may have something to do with it.
Members of the Fed's policy-setting committee, which left interest rates untouched Wednesday, left the door open to future rate hikes to curb inflation pressure.
Such a move may not happen until later this year or early 2009. But even a moderate increase in short-term interest rates by the Fed in the future could pose yet another headache for the struggling banking industry.
.....
Increased competition for depositsRising interest rates would also lead to even more intense competition for deposits, notes Michael Nix, a principal at Greenwood Capital Associates in Greenwood, S.C., which oversees about $750 million in assets.
Many online banks and brokerages have been offering their own interest bearing money market accounts, often at a higher rate than traditional banks, in recent years.
http://money.cnn.com/2008/06/26/news/companies/banks_margins/index.htm?postversion=2008062607