Interest Rates Rising For First Time In A Generation

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The world is changing for the generation in their mid-30s who have never experienced an interest rate rise – until now.

A whole generation has enjoyed record low interest rates for their economically active lifetime.

But rates have started to rise in America and the UK, and now other countries are starting to follow the lead.

The central bank in South Korea has just hiked official interest rates to 1.5%, but the bank chief Lee Ju-yol stressed that no more increases are lined up.

In the queue behind Korea are Malaysia and The Philippines.

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Rates have also risen in Canada, the Czech Republic, Mexico and Turkey.

Historic low rates in many countries

Interest rates hit historic lows in many countries a decade ago and have stuck their since.

Some have moved in the that time, but Asian central banks have not budged for almost four years.

The US Federal Reserve has seen some slow increases over the past year and now stands at 1.25% with further rises anticipated.

In Britain, the Bank of England has just pushed the official interest rate up 0.25% to 0.5%.

Trade is the driver behind the growth in interest rates in Korea.

The demand for electronic goods is strong globally, and South Korea is a powerhouse for producing phones, computers, chipsets and gaming consoles.

Companies in Korea and other Asian electronic centres are pulling in big profits and boosting economic growth in the region.

Brazil bucks the trend

If the trend keeps on, more Asian central banks will have to follow South Korea’s lead in early in 2018.

Out of 25 major central banks, only seven have raised interest rates. Brazil even knocked 0.5% off the main rate to bring official interest down to 7% just a few days ago.

The central bank cut the rate to an almost record low to stimulate seeming fragile signs of economic recovery in Brazil after two years of withering recession.

The government is worried that factories have a huge idle capacity impacting jobs, wages and growth and sees slashing the interest rate as a spark to light recovery touch paper for the country.

Find out more about official interest rates around the globe

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