POSB raises savings interest rates

POSB has recently raised its interest rates for savings accounts and fixed deposits across the board. For the POSB savings accounts, the revised rates are :

We have raised our interest rates for S$ deposits accounts on 3 Oct 05, the new rates are:

(I) POSB SAVINGS ACCOUNT* / POSB PASSCARD ACCOUNT

Existing (% p.a.) New (% p.a.)

First S$3,000 0.125 0.250

Next S$47,000 0.125 0.275

Next S$50,000 0.125 0.375

Remaining balance above S$100,000 0.250 0.475

- Well, it's not a lot better, as you can see. Although it's generally a doubling or more, the original rates have been stuck at an anemic 0.125% for a pretty long time. However, since practically every Singapore resident has a POSB savings account, it drives home the point that interest rates are going up. Informed folks should already be aware of that by now, seeing how the Fed has been hiking rates on multiple occasions, and how commodity prices, especially that of the all-important crude oil, have been going up of late.

Savings account interest rates may be a rather lagging indicator, but my opinion is that it's an important one. Will this drive people to put save more cash? Probably not that much more. Fixed deposits perhaps. And I've been watching my money markets tick up faster than the usual creeping pace in the past couple of weeks.

Banks typically pocket the difference between what they loan to their "best customers" (people on private housing loans and car loans) and what they dole out to savings account holders. So we can expect loans to get more expensive - which in fact, is already starting to happen.

As for next year, 2006, it could turn out to be an inflationary year. Unless "demand destruction" kicks in, we'd probably be expecting crude oil prices to continue to trend up. And, as you know, energy drives everything.

(2005-10-05 10:15:40 SGT) [Biz] Permalink

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