Oversea-Chinese Banking Corporation (OCBC) will lower its interest rates on its 360 Account, on Feb 1.

This marks the fourth change the bank has made to its flagship savings account since May 2020.

From Feb 1, account holders with a balance of $25,000 and below in their accounts will earn 0.3% interest, down from the 0.4% in October 2020.

Those who have between $25,000 and $50,000 will earn 0.6% interest, down from the 0.8% in October 2020, while those with $50,000 to $75,000 will earn an unchanged rate of 1.2%.

The latest round of rate revisions was made largely due to the US Federal Reserve’s clearly stated policy stance of keeping rates low, in a bid to fight the economic woes caused by the pandemic.

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This trend of ever-lower rates is a significant change from just a couple of years ago, when the banks were competing with one another to offer rates of nearly 3% for these accounts.

According to a report by UBS, the Fed’s latest economic projections indicate that its current rates will be put on hold until the end of 2023 at least.

“The major central banks are pointing to even more accommodative policy for even longer. Investors are being pushed harder to find yield. We expect real returns on cash and high grade bonds to be negative for the foreseeable future,” it says. 

Singapore’s monetary policy hinges more on the management of the relative strength of the Singdollar versus a basket of major currencies, and not by setting rates unlike the US, and whose movement of the rates affect rates here as well. 

OCBC is by no means alone. Since Jan 1, DBS Bank and Standard Chartered had already cut their rates to their flagship DBS Multiplier deposit account and JumpStart, respectively.

Rates will be slashed by up to 0.8 percentage points depending on the total eligible transactions per month for DBS’s Multiplier account.

This is the third round of changes to the bank’s Multiplier account since May 2020.

For Standard Chartered’s JumpStart, the interest rate on the first $20,000 was reduced to 0.4% from Jan 1, from 1% previously.

United Overseas Bank (UOB) also cut its interest rates on its UOB One account in November 2020.

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To be sure, low interest rates of savings accounts won’t annoy everyone. 

For example, property investors can take out cheaper loans, providing further support to the property market. 

And in the search for better returns, many people will be motivated to invest more of their savings, adding to further liquidity in the financial markets. 

Others, perhaps more conservative, might still keep a significant portion of their savings in these accounts despite the lower rates. It all depends on the savvy and appetite of the individuals.