Lock in higher interest rates now

Interest rates won’t rise for much longer. Savers still want a high return. A new type of ETF with lower costs could help. Consumers should remain vigilant and pay attention to inflation expectations.

DrThe European Central Bank raised interest rates again by 0.25 percentage points. The key interest rate is now 4.5 percent. This is good for savers. You can hope that interest rates on daily deposits and term deposits will continue to rise because they depend on the interest rates set by the European Central Bank. Some banks are already offering more than four percent.

This is less positive news for bondholders. Because higher key interest rates tend to cause a loss in bond prices. This is especially true for securities with short and medium maturities, which are more affected by central bank decisions than those with long maturities. The losses were particularly large last year when interest rates rose rapidly from zero percent. But this year too, yields continued to rise and prices fell accordingly.