Permanent TSB announces interest rate increase for fixed-term savings

The 0.5% increase will be applied to the bank's 12-month to five-year fixed-term savings accounts. 

Permanent TSB has announced a 0.5% increase to the interest rates it offers on its fixed-term savings accounts as the European Central Bank looks set to announce further rate hikes next week.

The ECB is set to meet on Thursday next week where another interest rate hike of 0.25% is expected to be announced. Interest rates have already increased by 4% since July last year.

In a statement, the bank said the 0.5% increase will be applied to its fixed-term deposit accounts from 12 months to five years.

This brings the bank’s 12-month and 18-month fixed rates to 1.75% and 2.00% respectively. Its three-year and five-year rates will increase by 0.5% to 2%. In addition, the rate on the six-month fixed term deposit will increase by 0.25% to 1%.

Darragh Cassidy of price comparison website Bonkers.ie said the rate increases offered on deposit accounts by Irish banks still “pale in comparison” to some other eurozone countries, which offer 3.5%. 

“However, on the flip side, PTSB, and all the main Irish banks, have been extremely slow at passing on the recent ECB rate increases to their mortgage customers,” he said, adding savers have been “subsidising mortgage customers over the past year”.

“While the ECB has hiked rates by four percentage points since last July, PTSB has only increased its fixed rates for mortgage customers by around two percentage points on average and its variable rates have only gone up by around one percentage point.” 

The new deposit rates will take effect from August 9. This is the fourth deposit interest rate increase announced by the bank since November last year.

Following its meeting next week, the ECB is not scheduled to discuss further monetary tightening until September. It is unclear whether another rate hike is expected at that stage or whether the ECB might keep rates the same.

Inflation in Ireland stood at 6.1% in June, which was down from 6.6% compared with May. Eurozone inflation stood at 5.5% for June, which was higher than expected.