 In 2022, global Central Banks began to increase interest rates to combat high inflation after an extended period of low or even negative interest rates. Low Central Bank interest rates meant that depositors and bond investors could earn little to no return from capital protected, low-risk investments.
In the last 12-18 months, interest rates in Europe have increased substantially. The current European Central Bank deposit rate is 4.00%, which is the rate banks can use for overnight deposits in the Euro system. Unfortunately, this increase has not been passed on to customers of the main Irish deposit providers including AIB, Bank of Ireland, PTSB and State Savings (An Post). With inflation in Ireland standing at 4.6% in December 2023, this is a significant issue for people with savings in bank deposits.  At the start of each year, most of the main private banks and investment managers issue glossy reports with countless pages and graphs outlining their expectations for investment markets for the coming year. These expectations can vary widely depending on the analysts view of the world. Some of these predications can go spectacularly wrong. |