This is not government debt, this is simply Central Bank balance sheet per capita (for every person in that country), and the numbers are staggering …
The Federal Reserve has unwound its balance sheet by 12% over the past year and reduced it to $3.81 trillion (from a peak of $4.5 trillion in 2017).
It has also increased interest rates since from 0.25% (range of 0% to 0.25%) in 2016 to 2.5% (range of 2.25% to 2.5%) now.
A decade on from the financial crisis, 38 countries currently have interest rates at an all-time low. Ultra-low interest rates seem to be the tool of choice for Central Banks to help stimulate economies globally. But seriously, this a decade on from the financial crisis? Did the world really recover from the financial crisis? Probably not …
Here are global central bank interest rates for each country in a table (in increasing order of interest rate in % on July 1, 2019),
Australia’s Central Bank, the Reserve Bank of Australia (RBA) cut its benchmark cash rate by 25 basis points to an all-time low of 1%. This following a cut of 25 basis points in June. This is the first time since 2012 that the RBA has delivered back-to-back interest rate cuts.
At the start of 2019 we wrote that 2019 will be a year that will be different with interest rate hikes slowing or interest rates even reversing.
Earlier this month the European Central Bank said interest rates would remain at record lows at least until the end of the year and then last week this was followed by the Federal Reserve saying that it does not expect an interest rate rise for the U.S. for the rest of 2019.
The Federal Open Market Committee (FOMC) announced during the week that it had decided to maintain the target range for the federal funds between 2.25% to 2.5%.
Between March 9, 2018 and March 9, 2019
- 53 countries raised interest rates with an average increase of 1.74%
- Excluding increases in Argentina, Turkey and Yemen, the average increase across the other 50 countries that raised interest rates was 0.82%
- 36 countries saw a decrease in interest rates, with an average decrease of 1.18%
- For all countries in the world, the average interest rate change was +0.29; excluding Argentina, Turkey and Yemen – the average interest rate change was -0.01%
The Governing Council of the European Central Bank (ECB) expects the key ECB interest rates to remain at their present levels at least through the end of 2019.
The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility are 0.00%, 0.25% and -0.40% respectively and these rates are expected to remain in place at least until the end of 2019.
The Federal Reserve increased the target for the bank’s benchmark rate by 0.25% (to a range of 2.25% to 2.5%) at the end of December, the ninth rate rise since 2015. Rising benchmark interest rates are having little impact on mortgage and saving rates or interest margin of banks.
Interest Margin of Banks in the United States stood at 3.33% at the end of Q3 2018, up just 0.03% from Q2 2018 (3.3%) and up just 0.18% from Q3 2017 (3.15%).