ICICI interest rates dropping?

Walletwatch

Just received the below from ICICI

With effect from October 30, 2008 we will be reducing the interest rate on our 1 year HiSAVE Fixed Rate Account (Without Early Access).
The new rate for this account will be announced on October 29, 2008 and will be applicable for accounts opened on or after October 30, 2008.

If you wish to take advantage of the current 7.20% AER/Gross on 1 year HiSAVE Fixed Rate Account (Without Early Access) please apply on or before October 29, 2008 by logging into your HiSAVE internet banking account.

Now, I think they are being very smart about it - if they are really going to reduce rates in response to the recent 50 bps cut, why not say it instead of saying that the new rate will be announced one day before it is effective?

The point here is that I think they will take stock at the last moment as to whether they are going to have sustained withdrawals to safer havens as has been the case over the past ten days in India and in the UK, and if so, they will not pass on the full 50 bps cut. Otherwise, it will be a nominal cut of say 0.1 or 0.15% to retain existing deposits and attract fresh ones.

Mind you, I am not moving money away from ICICI UK mainly due to the FSCS guarantee, and I have a good 60k there in a joint account, so am fully covered. So no, this is not rumour-mongering post like a number of recent ones I have seen on this forum.

DocProc

1. There has been criticism that the recent B of E rate cut of 0.5% was not enough to stimulate the economy. This is indicative that the B of E ought to DECREASE rates

2. On the other hand, the Inflation Rate has just been reported as being 5.2%. This is indicative that the B of E ought to INCREASE rates.

So which is it?

Which is most important? Inflation or The Economy?

And the guys in ICICI are talking about fixing it for one year from the date of commencement.

Generally speaking, commercial rates of interest are actually coming down for depositors and you might just possibly say, they are going up for borrowers. However, with the latter, I doubt it myself.

If you were ICICI Bank UK, then in which direction would you want to trend your Interest Rates for your savers. It looks like they have decided it has to be 'down'.

But by how much?

I think they have been pretty fair about it, really.