What would the term deposit rate be if the National Bank announces a 25 basis point rate hike in September?
The Federal Reserve will implement the steepest interest rate hike in the next few months to curb the highest domestic inflation in the United States in 40 years. The National Bank is also forced to follow suit and raise interest rates to prevent capital outflows and avoid the continued depreciation of the ringgit. If the National Bank announces an interest rate hike, fixed deposit rates will also follow suit.
The current interest rates for 1-month, 3-month, 6-month and 12-month time deposits are 2.00%p.a., 2.20%p.a., 2.30%p.a. and 2.35%p.a. respectively. If the National Bank raises interest rates by 25 basis points, then the 1-, 3-, 6- and 12-month time deposit rates will be 2.25% p.a., 2.45% p.a., 2.55% p.a., and 2.60% p.a.
For a deposit of RM5,000, a 25 basis points interest rate hike will earn the depositor an additional interest of approximately RM1.04 per month. A 50 basis points hike will earn an additional RM2.08.
If the National Bank chooses to raise the interest rate by an unprecedented 50 basis points, then the interest rates for 1-month, 3-month, 6-month and 12-month time deposits will be 2.50%p.a., 2.70%p.a., 2.80%p.a. and 2.85%p.a.
The National Bank has 2 more chances to raise interest rates this year, that is, in September and November. It is generally expected that the National Bank will raise the interest rate by 25 basis points in September and 25 basis points in November. It is recommended that you should try to choose short-term time deposits so that you can enjoy higher time deposit interest rates as soon as the National Bank announces an interest rate increase.
Current fixed deposit interest rates
1 month: 2.00%p.a.
3 months: 2.20%p.a.
6 months: 2.30%p.a.
12 months: 2.35%p.a.
fixed deposit rate after 25 basis points rate hike
1 month: 2.25%p.a.
3 months: 2.45%p.a.
6 months: 2.55%p.a.
12 months: 2.60%p.a.
fixed deposit rate after 50 basis points rate hike
1 month: 2.50%p.a.
3 months: 2.70%p.a.
6 months: 2.80%p.a.
12 months: 2.85%p.a.
