Banking Deals of the Week: June 16

Bank rate savers may have a long wait before the Federal Reserve decides to raise interest rates.

That after the Federal Reserve Bank of San Francisco released a research paper recommending that the Fed holds off on any rate increases until 2012.

That would go against the grain of many economists who believe that the Federal Reserve should hike rates in 2011, if not later in 2010.

The research paper — written by Glenn D. Rudebusch, a senior vice president and associate director of research at the San Francisco Fed — was fairly blunt in its assessment that lower rates are needed to fuel economic growth. “To deliver future monetary stimulus consistent with the past — and ignoring the zero lower bound — the funds rate would be negative until late 2012,” Rudebusch wrote. “In practice, this suggests little need to raise the funds rate target above its zero lower bound anytime soon.”

A continued lower interest rate environment would likely mean lower bank savings rates going forward — and that’s bad news for financial consumers looking for a break when it comes to low bank deposit rates.

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