Next Round USA & Japan? – Interest Rates tipped to go to 0%.
As you have read many time before NZ & Australia’s banking system is still holding up well, but maybe others still need drastic measures to “kick start” themselves again…
Some are nearly there…. (in fact some who have been there before too)…
Who knows where we are going overseas? Only a few weeks back the Bank of Japan slashed its short-term interest rate to 0.3 percent from 0.5 percent to help the world’s second-largest economy weather the global financial crisis.
Earlier this month the Bank of England lowered interest rates to three per cent – the lowest since 1954. However there is talk that the base rate could drop even further, as early as next week.
In 1939, interest rates stood at two per cent as Britain headed into war, and it looks likely as the UK battles with recession, the cost of borrowing could drop even further.
A drop below two per cent would see the cost of borrowing falling to its lowest since the Bank of England was founded in 1694.
And under the heading Zero Rate World May Lie Ahead as King, Trichet Cut – by Simon Kennedy and Craig Torres from Bloomberg comes this comment….
“It’s the race to zero,” said Stewart Robertson, an economist at Aviva Investors Ltd. in London, which manages about $230 billion. “There’s no obstacle to more rate cuts.”
And “Weber’s View” also from Bloomberg±
Both (ECB & Bank of England) will cut to 2.5 percent by the middle of next year, according to median forecasts in two surveys. That would be the fastest pace of easing in the ECB’s history.
Australia‘s central bank may also cut rates on Nov. 4, (ED –yes they did, and left the door open for more….) after lowering them by 1 percentage point to 6 percent last month, the biggest reduction since 1992.
HIGH INTEREST RATES WAVE FINISHED FOR NOW!
ECB Will Cut Rate to 1%, May Move it to Zero, Citigroup Says By Simon Kennedy
Nov. 21 (Bloomberg) — The European Central Bank will cut its benchmark interest rate to 1 percent next year and may consider moving it to zero as the region’s recession worsens, Citigroup Inc. said.
“We do not rule out that rates may go to zero,” Citigroup economist Juergen Michels said in a report to clients today.
It most certainly makes for interesting times, and the canny buyers out there will really have to pick their timing right next time around.
If memory serves me rightly, our region Nelson / Tasman was one of the first to take off last time. If you want to be kept in the loop, just click the “Subscribe to Nelson Real Estate by Email” on the top left of my blog front page and you’ll keep you up to date with this blogs comments.
Astute investors, get your ships in order, because I believe an interesting voyage is about to invite us on board.