Just read news on the approximate 50% cut in interests payments for OCBC360 account holders. Will they go back to offering better rates once the economy recovers?
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You savings is their liability,do you think bank like to pay more or reduce as much as they can?
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Elijah Lee
01 Jun 2020
Senior Financial Services Manager at Phillip Securities (Jurong East)
Hi Tong Soon,
As much as I hope it is, it's going to stay this way till interest rates pick up. If ...
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It really depends on the predictable benchmark interest rates. As of writing, SSBs just recorded their record lows.
https://www.businesstimes.com.sg/banking-financ....
This would give rise to the pressure to lower interest rates across risk-free cash holdings. When people aren't spending money, interest rates have to go lower to entice business and spending activity. This would stimulate economic activity and investments due to the nature of inflation. As to the question of recovery - that is anyone's guess. Japan and Europe had negative interest rates pre-Covid, and it does not look like it is going north anytime soon. There is a theory that equity will be the new bond due to very low-interest rates, combined with low inflation, which is something new, and that explains the rise in the equity market.