COUNTRIES WITH LOWEST INTEREST RATES
Today, many countries set their interest rates at record levels. Central banks are scrambling to battle deflation and bolster economic growth. Let us take a look at the countries with the lowest interest rates.
10-year government bond yield: 0.09%
Switzerland rattled financial markets after the Swiss National Bank removed the 1.20 cap against the euro in January 2015. As a result, the Swiss franc reached record highs. However, the central bank lowered its deposit rate to -0.75% to weaken the currency, and also deter investors and speculators from holding francs.
10-year government bond yield: 0.73%
The Sveriges Riksbank, to support an upturn in inflation, reduced its benchmark repo rate to -0.25% in March 2015 and announced it would purchase government bonds worth 30 billion Swedish krona. Sweden has been struggling to counter (or at least minimize) disinflationary pressures because consumer prices have been declining for months.
10-year government bond yield: 0.07%
Since 2011, the Bank of Israel has cut its benchmark interest rate 13 times to 0.1%. The country aims to uphold its competitive edge in exports, which comprises a third of its gross domestic product. To do so, the central bank devitalized the strength of the Israeli new sheqel.
10-year government bond yield: 0.42%
Japan espoused on a zero interest rate policy from 2001 to 2006. But, in December 2012, Prime Minister Shinzo Abe implemented an aggressive set of monetary and fiscal policies, combined with structural reforms. Dubbed as Abenomics, it aims to put the country out of decades-long stagnation, specifically to end deflation and bolster the economy.
10-year bund yield: 0.54%
In January 2015, the European Central Bank launched its quantitative easing program. It includes purchasing at least €1.1 trillion of bonds. As a result, several European sovereign bonds hit record lows. Caused by Greece’s debt crisis, overwhelming investor demand for German bunds resulted to lower yield on these bonds.