low interest rates

Snapshot of European financial sector' structure

Has Deflation Returned To Europe?

Azad Zangana (Schroders) | November 2020 was the fourth consecutive month that headline inflation for the eurozone – using the harmonised index of consumer prices (HICP) – was negative. The response to the coronavirus pandemic has caused the most severe economic shock across the continent since the Second World War. Temporary factors are to blame for current negative inflation rates, but low inflation is expected to keep interest rates very low for years to come.


The interests on the benchmark US bonds rose over 3% in April, for the first time since the start of 2014

Are US Treasuries Turning Japanese?

Keith Wade (Schroders) | Clearly, Japan’s debt is significantly higher than the US’. However, it is stable rather than rising. This reflects the poor position of US government finances before Covid-19, where the budget deficit was running at 6.3% of GDP at a time when the economy was doing well with unemployment at less than 4%, a 50-year low. (In net terms the comparison is less stark with Japan at 180% GDP versus 114% in the US).


The “R” club is recruiting

Sharp Rise In Public Debt: Will The Euro Area Resist?

Adriá Morrón Salmerón (CaixaBank Research) | The COVID-19 pandemic is causing a sharp increase in debt. Since the outbreak of the pandemic, public debt ratios have risen suddenly and significantly to almost unprecedented levels (the historical precedents are closely linked to major wars). For instance, in Italy and Spain a jump of +25 pps of GDP is expected in just one year, whereas it took five and three years, respectively, to amass a similar increase after the financial crisis of 2007-2008.

 


Interest rates

Who or what is to blame for such low interest rates?

DWS | Although many experts accuse central banks, private sector savings and investment trends are equally important. Eurozone sovereign debt yields have rebounded since the August lows but remain firmly anchored in negative territory. The question is not whether the ECB will raise its interest rates again but how to create an environment in which companies are willing to invest to generate profitability and that part of that profitability returns to the lenders. 


normalisation of interest rates

Interest Rates Dropped 450 bp To Record Lows Over The Last 30 Years

Interest rates have dropped 450 bp to record lows over the last 30 years. And they are at this level because the desire to invest and take a risk is lower than ever. It’s the weak demand from investment funds, not the central bank’s supply, which is the reason for the almost flat interest rate curve.


ECB

BIS proposes sadomonetarism to promote recovery

July 1, 2015 | By Benjamin Cole via Marcus NunesHistorinhas | The central banker’s club known as the Bank of International Settlements (BIS), suitably HQ’ed in Basel, Switzerland, this past weekend released its annual report, and advocated the globe’s major central banks raise interest rates to combat the chronic lack of aggregate demand and low inflation-deflation dogging the world’s developed economies.