The past year’s surge in interest rates has piled record amounts of debt onto poor nations, depriving them of money needed to invest in education, healthcare, infrastructure, and other essential building blocks they need to rise out of poverty, the World Bank said in a report last week.
At its mid-December meeting, the U.S. Federal Reserve’s Open Market Committee not only froze interest rates at their current levels, but also said it expects to make three quarter-point rate cuts next year and drop rates by a full point in 2025.
For the third successive meeting of its governing council, the Bank of Canada (BoC) left its key interest rate at 5 percent, saying that neither the economy nor the labor market are running at too fast a pace.
Speculation that the Bank of Japan is about to scrap its policy of negative interest rates, which has held the central bank’s key rate at -.10 percent since 2016, roiled the country’s markets last week.
Believing that inflation has been tamed and interest rates will not rise further, investors are piling back into global stocks, which had been seen as risky as long as the dollar was strong and U.S. interest rates continued to rise.
After piling up debt to fund COVID-era stimulus programs and health care costs, the world’s national governments will pay an additional $2 trillion in interest this year, according to data compiled by the International Monetary Fund and analyzed by research firm Teal Insights.
Investors are selling dollars at the fastest clip in the past 12 months on the belief that the U.S. Federal Reserve has stopped raising interest rates and will begin cutting them next year, the Financial Times reported.
Believing that the U.S. Federal Reserve has completed its campaign of interest rate hikes, investors are buying corporate bonds at the fastest clip since July 2020, the Financial Times reported.
Top-line inflation in Europe is easing, but central bankers are warning they do not expect to cut interest rates any time soon.
Americans under age 50 were more than $9.5 trillion in debt in this year’s third quarter, compared to about $9.3 trillion in the preceding three months, marking the largest quarterly increase since 2022’s fourth quarter, U.S. Federal Reserve data shows.