2024-09-12 22:58:30
The prospect of falling key interest rates at the European Central Bank has consequences for savers: they receive less interest from the bank.
Shortly before the European Central Bank’s (ECB) interest rate decision this Thursday, savers are receiving the lowest interest on fixed-term deposits in over a year. Nationwide offers with a term of two years yield an average of 2.68 percent, as an analysis by the comparison portal Verivox shows.
The last time fixed deposit interest rates were lower was in May 2023. For overnight money, however, interest rates remain largely constant, according to the study with a cut-off date of September 6. Since their peak in November 2023, fixed deposit interest rates have fallen by an average of 0.71 percentage points. With a decrease of almost 0.1 percentage points, average interest rates in August even fell significantly more than in previous months.
The development of savings interest rates depends largely on the monetary policy of the European Central Bank (ECB). The deposit interest rate that banks receive for money parked at the ECB is currently 3.75 percent. In view of the declining inflation in the eurozone, experts on the financial market are firmly expecting an interest rate cut. Further cuts could follow in the coming months. If the ECB’s deposit interest rate falls, banks usually pass this adjustment on to their customers.
“A reduction in the key interest rate is already priced into the current fixed-term deposit conditions,” says financial expert and Verivox managing director Oliver Maier. “In the coming weeks, the current trend is likely to continue and fixed-term deposit interest rates will continue to fall moderately.”
Because inflation has fallen significantly, the situation for savers has improved. After deducting inflation, which was 1.9 percent in Germany in August, the real interest rate for two-year fixed-term deposits with an average interest rate is 0.78 percent. “One year ago – with inflation of over 6 percent – even the best offers on the market did not bring a positive real return, and savings lost value,” says Maier.
Savers now benefit from the fact that inflation rates have fallen much faster and more sharply than the interest rates for traditional savings accounts such as overnight and fixed-term deposits.
According to Verivox, the interest rates for call money have hardly changed on average in recent weeks. Offers available nationwide have an average interest rate of 1.68 percent, which is even slightly higher than at the beginning of August (1.66 percent). At savings banks (0.61 percent) and regional cooperative banks (0.63 percent), the average interest rates are more than one percentage point lower.
“A large number of banks are still waiting for the central bank meeting,” Maier continued. If the ECB lowers the key interest rates, many banks are likely to quickly follow suit and reduce the interest on overnight money – as was the case after the central bank’s last interest rate move in June.