It’s been about a week and a half since the Federal Reserve cut interest rates by a quarter of a percentage point. That means lower interest rates should be starting to filter out through the economy, at least in theory.

But the Fed’s actions are several steps removed from the lenders who actually set interest rates on the loans and savings accounts they offer. And in the days since the Fed’s move, many interest rates have remained more or less unchanged.

Banks offer several types of loans with rates that adjust almost immediately after a Fed rate cut.

“That would be a line of credit, that could be an equity line on your house, that would be your credit card,” said Nathan Rogge, CEO of First Pacific Bank in Southern California.

Rogge said the bank does a lot of lending to small and medium-sized businesses. And those lines of credit have already gotten cheaper.

“That probably represents about a third of our portfolio,” Rogge said. “So it’s definitely not insignificant if a third is going to move pretty quickly.”

But Rogge said the bank hasn’t seen demand for loans pick up in the last week. In fact, demand has been fairly subdued all year. Rogge said that’s partly because many business owners are nervous about loading up on debt when the economy’s still so uncertain. But it’s also because rates are still four percentage points higher than they were just a few years ago.

“I have heard from clients, ‘I’ll do this when rates go down’,” Rogge said. “I think they imagine back to pre-2022. That’s a long ways to go to see those sorts of changes.”

Banks also have an incentive to keep rates on loans where they are. Chris Duncan, chief lending officer at La Salle State Bank in Illinois, said it uses interest payments on loans to pay interest to its depositors. And interest rates on the bank’s savings accounts and CDs haven’t dropped.

“Until those come down, and there’s a little bit more margin there between those deposits and what we’re lending out, I think banks are reluctant at this point to reduce a lot of their rates,” he said.

Duncan said those deposit rates he’s paying haven’t dropped much because banks face steep competition. Since so much banking happens online, he’s up against competitors across the country. 

“If they continue to keep their interest rates on their deposit offerings higher, then it doesn’t necessarily make good sense from a competition standpoint for us to lower our rates immediately,” Duncan said.

Banks also want their deposit rates to stay competitive in order to keep their customers happy.

Dominik Mjartan, CEO of American Pride Bank in Macon, Georgia, said the bank is still paying the same rate on high-yield checking accounts as it did before the Fed made its move.

“We want to focus on building those relationships,” Mjartan said. “And those are the relationships that we’re willing to pay the most for.”

Mjartan said the bank knows it can’t keep paying its depositors high rates forever if the Fed keeps cutting. But he said if it can establish a strong relationship with depositors, the hope is they’ll stay loyal.

“You will be able to reduce that rate, and the customer is so invested in that relationship, that they’re not going to be very rate sensitive to the point where they would go shop their loan around, or move their deposit accounts around,” Mjartan said.

Loyal customers might be more willing to pay the bank fees for the business services it offers.

“We charge fees for complex, intense services that require lots of technology or lots of people time, and a lot of intense relationship management with that customer,” Mjartan said.

Mjartan said as the Fed continues to cut interest rates, the bank’s going to have to rely more on income from those fees.