In this Real Time Insight post --I share with editors and subscribers alike-- fresh interest rate forecasts I acquired from Consensus Economics in London.
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|
|U.K.||0.5||0.9||40 basis points|
|U.S.A.||0||0.3||30 basis points|
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 rate 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.
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.
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- basis points