Global Real Interest Rate Charts (now with local currency gold prices)

Here we present this month’s update of the global real interest rate charts. Thanks to the idea of a participant on dasgelbeforum.de.org, we’ve decided to include local currency gold prices alongside the usual ‘real’ interest rate lines.

 

‘Real’ interest rates remain generally negative around the world. However, there are signs that this could be changing for the developing markets at least.

 

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

 

[Note: By ‘real‘ interest rates, we mean the short-term inter-bank rate minus the year-on-year growth in the consumer price index.]

 

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

 

Long Term Real Fed Funds Interest Rate Chart with USD Gold Price

Long Term Real Fed Funds Rate Chart - Click to enlarge. Sources: St Louis Fed & World Gold Council

 

Interestingly, we see empirical evidence for the contention that a plunging real interest rate is typically accompanied by a higher gold price. The steep decline in the ‘real’ interest rate in 1933 was closely accompanied by heavy withdrawals from the banking system and a series of governmental denials of reality. Importantly, the dollar was devalued from $20.67 per troy ounce to $35 per troy ounce shortly after (with the Gold Reserve Act of Jan 1934).

 

Likewise, the downward move in the real fed funds rate in the late-1960s was accompanied by the first cracks in the Bretton Woods agreement. Subsequently, we have seen several periods where a declining real fed funds rate has spurred on the dollar price of gold.

 

Short Term Real Fed Funds Interest Rate Chart with USD Gold Price

Short Term Real Fed Funds Rate Chart - Click to enlarge. Sources: St Louis Fed & World Gold Council

 

Moving onto the shorter-term timeframe, we can see that the latest data point (in July 2011) shows a heavily negative real fed funds rate.

 

Developed Markets:

 

The developed world continues to display generally negative real interest rates. The exceptions (below) are Australia and Norway.

 

US Real Interest Rate Chart with USD Gold Price

US - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Euro Area Real Interest Rate Chart with EUR Gold Price

Euro Area - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Japan Real Interest Rate Chart with JPY Gold Price

Japan - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

UK Real Interest Rate Chart with GBP Gold Price

UK - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Switzerland Real Interest Rate Chart with CHF Gold Price

Switzerland - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Canada Real Interest Rate Chart with CAD Gold Price

Canada - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Australia Real Interest Rate Chart with AUD Gold Price

Australia - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

New Zealand Real Interest Rate Chart with NZD Gold Price

New Zealand - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Denmark Real Interest Rate Chart with DKK Gold Price

Denmark - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Norway Real Interest Rate Chart with NOK Gold Price

Norway - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Sweden Real Interest Rate Chart with SEK Gold Price

Sweden - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Asia:

 

Asia continues to display broadly negative real interest rates. However, there are signs of life in Indonesia and Korea (since at least the ‘real’ interest rate lines are pointed upwards).

 

China Real Interest Rate Chart with CNY Gold Price

China - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

India Real Interest Rate Chart with INR Gold Price

India - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Indonesia Real Interest Rate Chart with IDR Gold Price

Indonesia - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Korea Real Interest Rate Chart with KRW Gold Price

Korea - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Eastern Europe:

 

We see a mixed picture in Eastern Europe now. Although real rates in the Czech Republic and the Russian Federation remain negative, they are at least starting to point upwards.

 

Czech Republic Real Interest Rate Chart

Czech Republic - 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

 

Russian Federation Real Interest Rate Chart with RUB Gold Price

Russian Federation - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Latin America:

 

Over recent months we have noted that Latin America has bucked the global trend of negative real interest rates. This continues to be the case.

 

Brazil Real Interest Rate Chart with BRL Gold Price

Brazil - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Chile Real Interest Rate Chart

Chile - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Mexico Real Interest Rate Chart with MXN Gold Price

Mexico - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

 

Middle East & Africa:

 

Israel Real Interest Rate Chart

Israel - Click to enlarge. Source: OECD Statistics

 

Turkey Real Interest Rate Chart with TRY Gold Price

Turkey - Click to enlarge. Source: OECD Statistics, World Gold Council & St Louis Fed

 

South Africa Real Interest Rate Chart with ZAR Gold Price

South Africa - Click to enlarge. Sources: OECD Statistics, World Gold Council & St Louis Fed

See here for our collection of rare historical economic data.

Posted Aug 24, 2011