Curtailing the bond purchases will drive long-term interest rates higher. But what most banks need to see expanding net interest margins and significantly higher net interest income is a parallel rise in interest rates, which will require the Fed to raise the target for the federal funds rate. The FOMC has repeatedly said this "highly accomodative" policy would likely remain appropriate until the unemployment rate falls below 6.5%, assuming inflation is held in check.
Bernanke has said it might be appropriate for the federal funds rate to remain right where it is even after the unemployment rate falls below 6.5%. Any deviation on Wednesday from his past remarks will be of great interest to investors and bankers.
Usdin sees further upside for Fifth Third's stock to $27, if the central bank raises the federal funds rate late in 2014.
The following chart shows the outperformance this year of Fifth Third's stock against the KBW Bank Index (I:BKX):
Data by YCharts
Interested in more on Fifth Third Bancorp? See TheStreet Ratings' report card for this stock.
>Contact by Email.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts