THE half per cent improvement in deposit rates earlier this year was good news for anyone relying on a savings account for their income. Three month deposit rates are now at 6.25 per cent, up from 5.94 per cent at the beginning of the year. Another, smaller, rise is a possibility, reports National Deposit Brokers (NDB) in their latest half-yearly report."The view is that if the Irish pound comes under further currency pressure, then Irish rates will need to increase by a further 0.25 per cent at least. It is our view that if exchange rates remain stable, then there is no foreseeable reason why interest rates should rise in the immediate future. "However, it is anticipated that volatility will exist in the foreign exchange markets from the period of May 1998 through to January 1st, 1999, as it is during this seven month period that exchange rates in relation to the Euro will be fixed."Because the expected upset in the financial markets will be temporary, NDB expects Irish interest rates to fall in 1999 and converge with German rates which currently stand at 3.06 per cent. "It is anticipated that German rates will rise slightly and that Irish rates will fall and settle at 4.5 per cent."Anyone in a position to fix their savings at today's higher deposit rates should proceed to do so - the two per cent difference in interest earnings amounts to an annual gross return of £3,125 on a £50,000 deposit, as opposed to just £2,250.The low anticipated returns from deposits after 1999 will also force some savers to reconsider their risk/reward profile and seriously consider, perhaps for the first time, higher risk options such as with-profit bonds from which higher incomes can be returned, and which are not such hostages to deposit returns. The trade-off, however is that capital and returns are not fully guaranteed.A copy of the Half Yearly Report on Deposit Interest Rates, is available from National Deposit Brokers, Heritage House, Dundrum Office Park, Dublin 14. Telephone (01) 298 9211.