National banks are expected to raise interest rates at least two times in 2022, and those who want to place time deposits may consider placing short-term time deposits for the time being.
As inflationary pressures in the U.S. increase, it is becoming more likely that the Federal Reserve will raise interest rates. Analysis predicts that after the U.S. raises interest rates in the second quarter, our national banks will also raise interest rates by 0.25% in the third and fourth quarters, respectively. This means that by the end of next year, the overnight policy rate could rise to 2.25% p.a. from the current 1.75% p.a.
Not only could a Fed rate hike prompt our country to raise rates, but inflationary pressures from supply chain disruptions and rising commodities will force the National Bank to raise rates. Once the National Bank raises the overnight policy rate (OPR), interest rates on time deposits will follow suit.
The interest rate for a 12-month regular time deposit is now 1.85% p.a., while the 12-month time deposit offer is 2.50% p.a. If the National Bank announces an increase in the overnight policy rate, the interest rate on a 12-month regular time deposit may be adjusted to 2.35% p.a., while the 12-month time deposit offer will be adjusted to 2.75% p.a. to 3.00% p.a.
If you place a 12-month time deposit directly now, you will still only enjoy the existing low interest rate until the end of the term after the national bank increases the overnight policy rate, and you will lose about 0.25 to 0.50% p.a.
Here we suggest you to just choose a 6 to 9 months time deposit so that you can enjoy the first time when the national bank announces the interest rate increase.
