Offshore Interest Rates

The deposit-takers have been fairly successful in consolidating their position this year despite fluctuating interest rates. But how will they fare into the millennium and beyond?

The general view is that interest rates will continue to rise as they have in the last quarter of 1999, but only for a matter of six months or so. Any peak in rates above 6.75 per cent will be a shock for most people. In the long term, however, this rise is likely to reverse and tend towards the European interest rate level of around 3 per cent.

Offshore Interest Rates & Chris Bradshaw

As far as deposit-takers are concerned, this will mean even more focus on the equity-linked products which have been viewed with some interest in European markets. It may also mean a movement into investment funds as many customers begin to feel the pinch on their deposits. Anyone looking for an income from their savings would be wise to consider one of these alternatives.

Offshore Interest Rates & David Siddall

Into 2000, Siddall believes that investment across several currencies will be an important aspect to the market. He adds: “The rates in the three major currencies are likely to stay the same until the beginning of 2000. After this, it is difficult to say - in 1998 no-one would have predicted that the euro and dollar rates would be so close. Having said that, the huge amounts of cash in the market over the millennium will cause an artificial, but nominal, rate increase.”

This is likely to ease back over the year, he says, but in the longer term it is generally agreed that the three currency rates will slowly begin to converge.