Commenting on bank lenders making aggressive increases to the interest rates on their savings accounts and fixed deposits but now lowering them, SMU Director of the Citi-SMU Financial Literacy Program for Young Adults and Assistant Professor of Finance (Education) Aurobindo Ghosh explained how high interest rates, while good for savers, typically slow down economic activities as borrowing for these business and industrial activities also becomes more costly. He also commented that the United States central bank left its benchmark overnight interest rate unchanged while holding onto its outlook for three cuts in borrowing costs this year, saying that this outlook signals that bank deposit rates might be among the first to be cut. But given market competition, it is likely that other banks could follow suit with changes in their savings account interest rates, depending on how much they have or need to acquire in deposits, said Asst Prof Ghosh.
