Shifting gears: Navigating the new normal of falling interest rates

WITH global interest rates heading south, you might be wondering what that means for your everyday finances. On the one hand, falling rates spell good news for those who are servicing their mortgage, particularly if they are on a floating rate. On the other hand, the returns you get from your savings accounts, fixed deposits and certain investments might shrink.

Many have enjoyed relatively higher returns in low-risk investments – such as Singapore Savings Bonds (SSBs) and Treasury bills (T-bills) – over the last two years. The current low rates is a wake-up call for consumers to be proactive and review their financial strategy. Ignoring these changes could mean missing out on opportunities or worse, seeing your hard-earned savings lose their value to inflation.

When the US Federal Reserve lowers its benchmark interest rate, it sets off a ripple effect across the global financial system. For consumers, this generally means cheaper borrowing and lower returns on savings.