In this Real Time Insight post --I share with editors and subscribers alike-- fresh interest rate forecasts I acquired from Consensus Economics
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First, Five Advanced Country Short Rate Forecasts.
The survey dated May 2014.
Short Term Interest Rates | |||
Latest | 12 Months | Rate Rise | |
Canada | 0.9 | 1.1 | 20 basis points |
Euro zone | 0.3 | 0.3 | No Change |
Japan | 0.2 | 0.2 | No Change |
U.K. | 0.5 | 0.9 | 40 basis points |
U.S.A. | 0 | 0.3 | 30 basis points |
Key takeaways?
Number One: Euro Zone and Japan economies will not be strong enough to sustain monetary policy rate hikes in 2015.
Number Two: Canada, the U.K., and the U.S.A. economies will be strong enough to support 20 to 40 basis points higher short rates in 2015. This is equal to a 0.2% to 0.4% rise in short-term interest rates. Use 60-day bank CD rates as a proxy.
Second, Seven Advanced Country Long Rate Forecasts.
Long Term Interest Rates | ||
Latest | 12 Months | |
Canada | 2.4 | 3.2 |
Germany | 1.5 | 2.2 |
Spain | 2.9 | 3.6 |
South Korea | 3.5 | 4.0 |
Japan | 0.6 | 0.9 |
U.K. | 2.7 | 3.3 |
U.S.A. | 2.7 | 3.5 |
Key takeaways?
Number One: South Korea will have the highest long-term interest rate in 2015.
Number Two: Spain and the U.S.A. will be the next tier, for different reasons. Spain will have a higher risk premium. The U.S.A. will have a stronger economy in 2015.
Number Three: Canada and the U.K. are just behind the U.S.A. in 2015.
Number Four: Germany and Japan will have the lowest long-term interest rates. This is mostly due to weak consumer inflation rates.
My RTI Question: Based on Fresh Rate Data, How Do You Invest in the World?
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