The Sunday Times report here. (Free registration required to read up to 2 articles per week).
I don't agree that negative retail rates are coming:
- Thus far, in the many countries with zero or negative base rates, the lowest retail rates, bar a tiny number of exceptions, has being zero.
- In Japan, the country with zero or close to zero base rates for the longest, the lowest retail rates are also zero.
- The risks of cash hoarding, deposit losses and the loss of the ability to cross sell products, will mean that banks will not want to annoy customers with negative rates.
I think 0.00% AER is the floor and rates on average are fast approaching that floor.
This year looks like being another bad one for depositors — and possibly a historic one. Expectations are high that 2017 will be the first year in which Irish savers are obliged to pay for money sitting on deposit. This would mean negative returns — or depositors’ money slowly dying over time as negative interest rates and inflation bite.
Some banks have started to charge negative interest rates to corporate depositors; this suggests it is only a matter of time before the same happens to smaller savers.
I don't agree that negative retail rates are coming:
- Thus far, in the many countries with zero or negative base rates, the lowest retail rates, bar a tiny number of exceptions, has being zero.
- In Japan, the country with zero or close to zero base rates for the longest, the lowest retail rates are also zero.
- The risks of cash hoarding, deposit losses and the loss of the ability to cross sell products, will mean that banks will not want to annoy customers with negative rates.
I think 0.00% AER is the floor and rates on average are fast approaching that floor.