banks have proven their durability time and again since the pandemic but realizing outsize gains in bank stocks requires a healthy consumer—and that could get tougher understanding what’s going on with bank stocks these days leads to some circular reasoning going into 2022 banks were expected to outperform because it was widely understood that the federal reserve would have to lift interest rates to combat inflation higher interest rates are good for banks because they increase the amount of interest banks can earn on the loans they make the trouble is the inflation that necessitates higher rates can harm bank customers feeling cashstrapped by rising costs customers may start to miss payments on existing loans or hesitate to make big purchases because more of their income is tied up on necessities