SINGAPORE: Because inflation has not decreased sufficiently, interest rates in the US may remain unchanged.
Chairman of the US Federal Reserve Jerome Powell stated that obtaining the “greater confidence” required to begin reducing rates would probably take longer than anticipated.
Singapore’s interest rates are set by expectations in the foreign exchange market and worldwide rates. This entails essentially following the lead set by other central banks, particularly the US Federal Reserve.
In addition to earning interest from customers who borrow money from them, banks also pay interest to people who deposit money with them. Some banks are not making much interest because they have more money than their clients want to borrow.
Mr Alfred Chia, the CEO of SingCapital Financial Advisory, stated, “They have challenges lending all this money out because property transactions have slowed down.” They also have to pay large interest payments at the same time.”
Therefore, banks that cut interest rates might be doing so to cut expenses. Furthermore, banks may continue to struggle with having more money than they can lend out if US interest rates remain high for an extended period, according to Mr. Chia. However, according to Mr. Glenn Thum, senior research analyst at Phillip Securities Research, specifically for UOB, the Fed or market expectations may not have had any influence on the decision to lower rates.
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