Good morning. CFOs are tasked with practicing precision in balancing short-term and long-term goals in a macro environment. But now with rate cuts, they could be finding more flexibility to look beyond the short term.

Bank of America (BofA) CFO Alastair Borthwick made that observation during a media call last week. Coming out of the pandemic, “rates went from 0% to 4% and 5% very, very quickly, and that was a period of a lot of adjustment, making it very difficult for CEOs and CFOs to make long-term decisions,” Borthwick said.

That dynamic is less true today, based on what BofA is seeing from investment banking clients, he said. We now appear to be a low-growth economy, with inflation coming down, Borthwick said. “We've got an interest rate structure that's a little less volatile, and that means the clients, I think, are more interested in expressing a view for the long-term,” he said.

In Q3, BofA grew investment banking fees 18% year over year to $1.4 billion as clients’ confidence increased in taking on more debt and equity issuance. This appears to be a trend as, in addition to BofA, during Q3, investment banking fees across the board for big banks such as Wells Fargo, Goldman Sachs, J.P. Morgan, Citigroup, and Morgan Stanley, were up year over year, which is seen as a positive by Wall Street.

“A higher but stable interest rate environment provides more certainty, allowing business the ability to do more long-term strategic planning,” Mark T. Williams, a finance faculty member at Boston University’s Questrom School of Business, told me. "That's probably why you're seeing more investment banking activity as well," he added.

The 10-year treasury hit 4.19% on Monday, a high not seen since July 2024, said Williams, a former bank examiner for the Federal Reserve. On Sept. 18, the Fed announced a 50-basis point cut to its benchmark interest rate, which is the first rate cut in four years.

Three weeks ago, a very strong jobs report surprised the market, and then we had inflation that seemed to be kind of in control, Williams said. “At best, I think the prediction is that the Fed's going to reduce rates maybe by 25 basis points at its next meeting, and that's what really pushed the Treasury back up,” he said. The Federal Open Market Committee will meet again Nov. 6-7.

Sheryl Estrada
[email protected]

This story was originally featured on Fortune.com