Deposit Rates at Record Lows as Bank Liquidity Remains Elevated

Belize's weighted-average deposit rate remained near a record low at 0.816% in May 2026, after falling to an all-time low of 0.780% in March, underscoring how abundant banking-system liquidity is reshaping returns for savers while lowering funding costs for banks.

The weighted-average deposit rate stood at 0.816% in May 2026, according to the Central Bank of Belize's latest interest rate statistics. While slightly higher than the record low of 0.780% recorded in March 2026, it remains among the lowest monthly readings since the Central Bank began publishing the series in 1977.

The latest figures continue a downward trend that has accelerated over the past two years. The weighted-average deposit rate first slipped below 1% in late 2024 and has remained there ever since. In January 2026, the average stood at 0.872%, before easing to 0.816% by May.

The weighted-average deposit rate should not be confused with the interest rates paid on individual deposit products. Banks offer different rates depending on the type of account. Demand deposits, which can generally be withdrawn at any time, paid 0.1% in May. Savings and chequing accounts averaged 2.6%, regular savings accounts also averaged 2.6%, while time deposits, where customers agree to leave their funds with the bank for a fixed period, averaged 2.0%. The weighted-average rate combines all of these deposit categories based on the amount of money held in each, providing an overall measure of what banks are paying across their entire deposit base.

For households, the figures mean that many traditional savings products are generating historically modest returns. A depositor earning 0.8% annually would receive about BZ$80 in interest over one year on a BZ$10,000 deposit, before taxes or fees. Over a 10-year period that household gains roughly $830 on that $10,000 deposit.

For businesses, the picture is more nuanced. Lower deposit rates reduce banks' funding costs, which can support profitability and, in competitive markets, create room for lower lending rates or increased credit availability. Whether those benefits are passed on to borrowers depends on loan demand, competition among banks, and broader economic conditions.

One factor contributing to the decline is the banking system's persistent excess liquidity.

Central Bank liquidity data show that domestic banks held over BZ$400 million in excess cash at the end of May 2026. Throughout the past year, excess liquidity has remained well above BZ$400 million.

Excess liquidity means banks are holding more cash than they are required to keep in reserve. When cash is plentiful and deposits are abundant, banks have less incentive to compete aggressively for additional deposits by offering higher interest rates.

Belize's experience mirrors trends seen in several banking systems following periods of elevated liquidity, whether driven by strong deposit growth, cautious lending, or expansionary monetary conditions. With banks flush with cash, attracting additional deposits becomes less of a strategic priority.

The figures also raise broader questions about financial intermediation. Persistently low deposit rates can discourage saving through traditional bank products, particularly when inflation erodes purchasing power. At the same time, abundant liquidity may signal that funds available for lending are not being fully converted into productive investment across the economy.

Whether deposit rates remain near historic lows will depend on how quickly excess liquidity is absorbed through stronger credit demand, investment activity, or changes in monetary conditions. For now, the data suggest Belize's banking system remains awash with cash—and savers continue to receive some of the lowest overall deposit returns in nearly half a century.