The rise in rates spurs deposit returns in Europe.

Update Post: November 28, 2023 9:22 am

The immediate future of the European Central Bank’s monetary policy remains uncertain, especially after the FED decided to maintain rates after its last meeting. After a new increase last week by the ECB, reaching 4.50%, it is difficult to predict whether it will be time for the body chaired by Christine Lagarde to approve a pause or a new increase in these. The decision will be made on October 26.

The main objective of the ten increases that have been achieved since July 2022 is to try to reduce inflation to 2%. However, they are still far from that reality, the forecasts of the regulatory entity rule out reaching the objective until 2025. Last August, prices in the eurozone grew by 5.3% and are expected to close the year with an inflation of 5.6%. By 2024 the ECB estimates that the price increase will be reduced to 3.2%, and in 2025 to 2.1%.

However, in this situation it is also beneficial for the most conservative savers. The rise in rates increases loans and mortgages, but at the same time improves the returns on conservative savings products. After more than a year since this restrictive monetary policy began, Spanish banks now seem to react to these financial products with the improvement of their profitability. However, they are still far from the remuneration offered by the entities of the Old Continent.

Looking for new clients

At this time, European banks adjust their interests to be able to attract new clients. One of the banks that offers the best conditions with its deposits is the Lithuanian entity Mano Bankas with an investment return of 4.15% on its 12-month deposit, despite having reduced the interest on all its products, reports Raisin, a European deposit platform. saving. The interest rate on its 6-month product has been reduced to 4.01% APR.

On the other hand, SME Bank (Lithuania) has also improved its offer with very competitive interest rates in terms ranging from 6 months to 24. The products offered include a 4% APR for 6 and 9 month deposits, an attractive 4.40% APR for one-year investments and 3.98% APR for those looking to invest in 24-month terms. In Norway, Lea Bank has also adjusted its interest rates. The entity has announced an increase in rates on its account, offering savers an attractive 2.97% APR.

These changes that banks manage have the main objective of updating their products according to the direction followed by the European Central Bank. Although, as some experts explain, the banks continue to manage the situation as they wish. They take advantage of this situation since the differential between what they charge for lending money and what they offer for savings products is still very wide. In this context, it can be seen in the stock markets that the financial entities are those that are obtaining the best results in the last 12 months.

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September 23, 2023 4:49 am