Why are interest rates on high yield savings accounts higher in the US than in the EU while USD TO EUR remains relatively stable?

Question

Why are interest rates on high yield savings accounts higher in the US than in the EU while USD TO EUR remains relatively stable?

In: Economics

Answer 1

The international exchange rates do not directly affect the interest rates banks pay out on savings accounts. Generally speaking, the most important factors affecting those rates are how badly the bank needs to get funds and what are the prevailing interest rates within each country (and in the European bloc, with respect to the euro). Individual banks may raise or lower their rate a bit based on their own books, but the general rates rise and fall based on their country’s or jurisdiction’s prevailing rates. U.S. rates went up because the Federal Reserve raised interest rates over the past couple years.