Money market funds and call money rates rise amid interest rate shifts

Investors are increasingly looking toward money market funds and high-interest call money accounts following the end of zero-interest policies. Money market funds, which include both actively managed funds and passive ETFs, aim to keep capital stable while tracking current market rates like the Euro Short-Term Rate (€STR). While considered relatively safe, these funds do not benefit from statutory deposit insurance and their returns fluctuate with central bank interest rates.

In the retail banking sector, competition for new customers has driven interest rates for call money up, with some providers offering at least 4% for new deposits. For example, Revolut offers 4.25% under specific conditions, and Chase has entered the market with competitive rates. This surge in competition is partly attributed to the entry of digital brands like Chase, a subsidiary of J.P. Morgan. However, rates for existing customers at many traditional banks remain significantly lower, often averaging around 1.4% or less.