Media coverage of the banking crisis may have awoken depositors to the higher interest rates they can gain in money market accounts, which have drawn large cash inflows this month, Franklin Templeton President and CEO Jenny Johnson suggested in a recent CNBC interview.
Money market funds now exceed $5.1 trillion in assets, setting a new record, as about $300 billion flowed in over the past month, various news outlets have reported recently, citing Bank of America data.
Johnson, appearing Friday on CNBC's "Squawk on the Street," noted banks have faced a tough situation given the quick rise in interest rates over the past year.
"You have loan portfolios and investment portfolios that are locked in, and so banks are paying depositors one — in some cases, zero — one, 1.5[%], and you can get a money market fund at 4.5% backed by U.S. government securities," she said.
"All this media attention has woken people up to that fact, so yes, you're seeing people move from banks into money market funds."
Franklin Templeton expects the Fed may raise its benchmark interest rate another 25 basis points and won't start lowering rates in 2023, said Johnson.
