What would the term deposit rate be if the National Bank announced a 25 basis point rate hike in January?
The Federal Reserve is expected to continue to raise interest rates in 2023 to curb domestic inflation in the United States, and Bank Negara Malaysia is expected to follow suit. The interest rate hike is not only to prevent the outflow of funds and the continued depreciation of the ringgit, but also to curb the domestic inflation in the country.
If the National Bank announces an interest rate increase, the interest rate on time deposits will also be raised. The current interest rates for 1-month, 3-month, 6-month and 12-month time deposits are 2.50%p.a., 2.70%p.a., 2.80%p.a. and 2.85%p.a. respectively. If the National Bank raises interest rates by 25 basis points, then the 1-month, 3-month, 6-month and 12-month time deposit rates will be 2.75%p.a., 2.95%p.a., 3.05%p.a., 3.10%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 point increase will earn an additional RM2.08.
If the NBBC unprecedentedly chooses to raise the interest rate by 50 basis points, then the interest rates for 1, 3, 6 and 12 month time deposits will be 3.00%p.a., 3.20%p.a., 3.30%p.a. and 3.35%p.a.
There are already banks in the country that offer time deposit offers of 4.50%p.a. for 18 months of deposit. If the National Bank continues to raise interest rates again, then it may be possible to find a time deposit offer of 4.50% p.a. for only 12 months of deposit.
Since the National Bank may continue to raise interest rates in January and March, it is recommended that you should try to choose short-term time deposits so that you can enjoy a higher time deposit rate as soon as the National Bank announces an interest rate increase.
Current interest rates for time deposits
1 month: 2.50%p.a.
3 months: 2.70%p.a.
6 months: 2.80%p.a.
12 months: 2.85%p.a.
Fixed deposit rate after 25 basis points rate hike
1 month: 2.75%p.a.
3 months: 2.95%p.a.
6 months: 3.05%p.a.
12 months: 3.10%p.a.
Fixed deposit rate after 50 basis points rate hike
1 month: 3.00%p.a.
3 months: 3.20%p.a.
6 months: 3.30%p.a.
12 months: 3.35%p.a.
