Low interest rates hurt savers

Article Excerpt

Central banks have reduced their primary lending rates over the past few months in an effort to help borrowers, including governments, corporations and individuals, cope with the economic fallout from the COVID-19 pandemic. In addition, central banks have also commenced large-scale purchases of government and corporate debt in an effort to further inject money into the system and force down longer-term interest rates. These actions have resulted in sharply lower interest rates available to lenders and investors. In fact, in the U.S. and Canada, savings accounts at the major banks now offer as little as 0.10% (excluding special introductory rates). In parts of Europe, lenders earn zero interest on savings accounts and may even be charged a deposit fee for higher amounts —almost like a safekeeping fee. For investors in longer-dated government bonds, the interest-rate picture is equally weak. In the U.S. and Canada, rates on 10-year bonds fluctuate around 0.60%. That means that investors will receive a total return of 0.60% per year…

You are trying to access subscriber-only content.

To read this article, you may subscribe or sign in.
If you are already a subscriber, log in here.

If you wish to become a subscriber, click here. Or you may enjoy access to all our publications when you become a Member of Pat McKeough's Inner Circle Pro.