Global Real Interest Rates – Chart Updates 27/4/11

The updated global real interest rate charts:

 

[EDIT: For up-to-date real interest rate charts see here.]

 

Long-term & Short-term Real Fed Funds Rate:

 

The declining trend in the real fed funds rate continued in march. The charts of the real fed funds rate have shown sharp declines in recent months. We should note that gold has been on a tear higher in recent months also – this corroborates the usual thesis that ‘negative real rates are positive for the gold price’.


Long-term Real Fed Funds Rate Chart

Click to enlarge. Source: St Louis Fed

US Real Fed Funds Rate Chart

Click to enlarge. Source: St Louis Fed

Developed Countries:

 

With the exception of Australia (only updated until Dec 10) and Norway, real interest rates in the developed world are negative and declining. As has been mentioned in previous updates, this does not bode well for business conditions in the west. A generally increasing money supply is positive for business conditions (as businesses typically own things and owe money). Such negative and falling real interest rates have the tendency to unwind the fractional-reserve banking pyramid and cause declines in the stocks of ‘IOU money‘. This can be extremely negative for general business conditions and can drive money to better shores.

 

US Real Interest Rate Chart

US - Click to enlarge. Source: OECD Statistics.

Euro Area Real Interest Rate Chart

Euro Area - Click to enlarge. Source: OECD Statistics.

Japan Real Interest Rate Chart

Japan - Click to enlarge. Source: OECD Statistics.

UK Real Interest Rate Chart

UK - Click to enlarge. Source: OECD Statistics.

Switzerland Real Interest Rate Chart

Switzerland - Click to enlarge. Source: OECD Statistics.

Canada Real Interest Rate Chart

Canada - Click to enlarge. Source: OECD Statistics.

Australia Real Interest Rate Chart

Australia - Click to enlarge. Source: OECD Statistics.

New Zealand Real Interest Rate Chart

New Zealand - Click to enlarge. Source: OECD Statistics.

Norway Real Interest Rate Chart

Norway - Click to enlarge. Source: OECD Statistics.

Sweden Real Interest Rate Chart

Sweden - Click to enlarge. Source: OECD Statistics.

Asia:

 

Real interest rates in China, India and Korea remain negative. As mentioned here, this is fairly bearish for Asian markets.

 

China Real Interest Rate Chart

China - Click to enlarge. Source: OECD Statistics.

India Real Interest Rate Chart

India - Click to enlarge. Source: OECD Statistics.

Korea Real Interest Rate Chart

Korea - Click to enlarge. Source: OECD Statistics.

 

Eastern Europe:

 

Although not quite as bad, real interest rates in Eastern Europe are generally negative and falling.

 

Czech Republic Real Interest Rate Chart

Czech Rep. - Click to enlarge. Source: OECD Statistics.

Hungary Real Interest Rate Chart

Hungary - Click to enlarge. Source: OECD Statistics.

Poland Real Interest Rate Chart

Poland - Click to enlarge. Source: OECD Statistics.

Russia Real Interest Rate Chart

Russian Federation - Click to enlarge. Source: OECD Statistics.

 

Latin America:

 

In contrast, real rates in Latin America are positive and rising. The implication is that the tendencies for an unwinding fractional-reserve banking system are limited. Relative to the west and other parts of the emerging world, Latin American countries could do well.

 

Brazil Real Interest Rate Chart

Brazil - Click to enlarge. Source: OECD Statistics.

Chile Real Interest Rate Chart

Chile - Click to enlarge. Source: OECD Statistics.

Mexico Real Interest Rate Chart

Mexico - Click to enlarge. Source: OECD Statistics.

 

Middle East & Africa:

 

Real interest rates in Israel and Turkey display clearly bearish dynamics. Real rates in South Africa are pointed down but not at dangerous levels yet.

 

Israel Real Interest Rate Chart

Israel - Click to enlarge. Source: OECD Statistics.

Turkey Real Interest Rate Chart

Turkey - Click to enlarge. Source: OECD Statistics.

South Africa Real Interest Rate Chart

South Africa - Click to enlarge. Source: OECD Statistics.

 

Posted Apr 27, 2011

The Best Article on this Site: