Base Rate Hike Imminent... Are Commercial Banks Entering the 6% Deposit Era?

Commercial Bank Deposits Already Reach Mid-5% Range
Savings Banks Introduce Products in 6% Range
Expectations for Further Hikes if Bank of Korea Raises Base Rate

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] As the Bank of Korea is expected to raise the base interest rate once again next week, interest in deposit products at commercial banks is growing. Attention is focused on whether fixed deposits will rise to the 6% range.

According to the Bankers Association on the 17th, the highest interest rate among current deposit products at commercial banks is offered by BNK Busan Bank's 'The Special Fixed Deposit,' providing up to 5.40% for a 12-month term. Other fixed deposits in the 5% range can be easily found, such as Jeonbuk Bank's 'JB 123 Fixed Deposit (5.30%)', SC First Bank's 'e-Green Save Deposit (5.10%)', and KB Kookmin Bank's 'KB Star Fixed Deposit (5.01%)'.

In the case of installment savings, products with interest rates in the 7% range have already appeared. Jeonbuk Bank's 'JB Card Financial Management Installment Savings (Regular Installment)' offers up to 7.00% interest (12-month term). This level of interest rate, previously seen only in special products from mutual finance institutions or savings banks, has now appeared at commercial banks as well.

Savings banks are also quickly raising interest rates to attract deposit balances. According to the Korea Federation of Savings Banks, the average interest rate has already reached 5.50% as of this date. Sangsangin Savings Bank has launched numerous deposit products offering 6.10% interest (12-month term). This exceeds the highest interest rate for savings bank installment savings of 6.00% as of the same date.

As it is almost certain that the Bank of Korea will raise the base interest rate soon, financial consumers are fiercely engaged in a "waiting game" for deposit products with higher interest rates. Information about various special offers is already rapidly circulating in online communities. Kim Yonghwan (30), an office worker, said, "Like last year's public offering craze, information about special fixed deposit and installment savings products seems to be spreading very quickly now," adding, "People around me are sharing information and moving quickly between products."

Meanwhile, the Bank of Korea will hold a Monetary Policy Committee meeting on the 24th to decide whether to raise the base interest rate. The current base rate is 3.00%. It has tripled in 10 months from 1.00% at the end of last year. The 'big step' (a 0.5 percentage point increase in the base rate at once) has already been taken twice. Each time, commercial banks also raised their fixed deposit and installment savings interest rates.

This content was produced with the assistance of AI translation services.