Are low interest rates here to stay?
Posted on February 12, 2007 by Richard Beddard
Filed Under Investing |
The Bank of England held interest rates last week, prompting some pundits to say they’ve peaked. Business Week says low interest rates are here to stay thanks to globalisation and financial innovation, factors that are as true of the UK as the US. In his book Ken Fisher says ‘low’ interest rates are normal:
“Investors tend to talk about today’s ten year Treasury rate as historically low,” he says. “No! The long bond rate during the 1970’s was freakishly high.”
I’ve scoured the net for a chart to illustrate his point but can’t find any that go further back than the 1950’s or 60’s like this one from Yahoo!:
It shows US long bond rates scaling a mountain in the 1970’s and descending ever since, with what many interpret as an uptick at the end signalling a return to higher rates. Re-draw the scale back to 1800 though, as Mr Fisher does, and you’ll see that, historically, rates rarely boke above 6%, and never breached 8% until that brief period of “monetary madness” in the mid 1970’s. Perhaps pundits are scarred by the memory.
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Hopefully this site is a very good one for updating the results on the interest rates. . . Maybe next time I am expecting that the updates on interest rates would somehow also compared to worldwide situation like asia and other continents… This would be for the benefit of the worldwide seekers of the present comparison on interest rates due to globalization and other factors.