From the dizzying heights of 18.63% mortgages in 1981 to the unprecedented era of negative rates in Europe, the wild journey of interest rates tells the story of our global economy.
Key Takeaways
- The US Federal Funds Rate was set at 5.25% on June 30, 2006, marking the peak of the tightening cycle post-dot-com bubble.
- In 1981, the US Prime Rate reached a record high of 20.50% amid double-digit inflation.
- The Bank of England's Base Rate was 17% in November 1979 during the Volcker-era global fight against inflation.
- The Effective Federal Funds Rate stood at 5.33% as of July 3, 2024.
- ECB Deposit Facility Rate is currently -0.40% effective October 2023.
- Bank of England Bank Rate is 5.25% as of August 2024.
- The US Fed Funds Rate is projected to be 4.10% by end of 2024.
- ECB Deposit Rate expected to fall to 2.50% by mid-2025.
- BoE Base Rate forecast at 3.75% by Q4 2025 per market consensus.
- US Federal Funds Rate averaged 5.33% in Q2 2024, impacting GDP growth by 0.5% drag.
- Every 1% rise in ECB rates reduced Eurozone GDP by 0.3% in 2023 models.
- BoE rate hikes from 2021-2023 slowed UK housing starts by 15%.
- US average 30-year fixed mortgage rate is 6.89% as of July 4, 2024.
- UK 2-year fixed mortgage rate averages 4.85% in July 2024.
- Average US credit card APR is 24.57% as of Q2 2024.
Interest rates have reached extreme historical highs and lows across the globe.
Current Rates
- The Effective Federal Funds Rate stood at 5.33% as of July 3, 2024.
- ECB Deposit Facility Rate is currently -0.40% effective October 2023.
- Bank of England Bank Rate is 5.25% as of August 2024.
- RBA Cash Rate target is 4.35% since November 2023.
- BOJ Short-Term Policy Rate is -0.10% with YCC adjustment as of July 2024.
- US 30-Year Fixed Mortgage Rate is 6.95% average as of July 2024.
- Bank of Canada Overnight Rate is 4.50% as of June 2024.
- SNB Policy Rate is 1.50% since June 2024.
- Fed Prime Rate is 8.50% as of July 2024.
- US 10-Year Treasury Yield is 4.35% as of July 5, 2024.
- India's Repo Rate is 6.50% as of June 2024.
- Brazil Selic Rate is 10.50% as of June 2024.
- South Africa Repo Rate is 8.25% as of May 2024.
- China's 1-Year LPR is 3.45% as of May 2024.
- Sweden Repo Rate is 3.75% as of July 2024.
- Norway Key Policy Rate is 4.50% as of June 2024.
- New Zealand OCR is 5.50% as of April 2024.
- Turkey Policy Rate is 50.00% as of June 2024.
- Russia's Key Rate is 16.00% as of June 2024.
- ECB Main Refinancing Rate is 4.25% as of June 2024.
- US SOFR Rate averaged 5.31% on July 3, 2024.
- UK 2-Year Gilt Yield is 4.02% as of July 2024.
- Eurodollar Deposit Rate (3-month) is 5.40% as of July 2024.
- Average US Savings Account Rate is 0.45% APY as of July 2024.
- US Auto Loan Rate (60-month new) averages 7.18% as of Q2 2024.
- Fed Funds Rate target range is 5.25%-5.50% as of July 2024.
Current Rates Interpretation
While the Fed is practically shouting "no free money!" at 5.33%, the ECB is still quietly charging banks for the privilege of holding their cash at -0.40%, proving that in the global interest rate party, some guests are aggressively taking away the punch bowl while others are still subtly asking you to pay for the cup.
Economic Impact
- US Federal Funds Rate averaged 5.33% in Q2 2024, impacting GDP growth by 0.5% drag.
- Every 1% rise in ECB rates reduced Eurozone GDP by 0.3% in 2023 models.
- BoE rate hikes from 2021-2023 slowed UK housing starts by 15%.
- RBA rates above 4% contributed to 1.2% unemployment rise in Australia 2023-2024.
- BOJ negative rates boosted Nikkei by 40% from 2016-2020.
- US 30-year mortgage at 7% in 2023 reduced home sales by 20% YoY.
- BoC hikes led to 8% drop in Canadian retail sales growth 2023.
- SNB interventions kept CHF appreciation low, aiding exports by 2% GDP.
- RBI repo hikes curbed CPI inflation from 7.8% to 5.4% in FY2023.
- Brazil Selic tightening reduced inflation from 12% to 4.5% 2022-2024.
- SA repo hikes slowed GDP to 0.6% in 2023.
- China rate cuts post-2022 spurred M2 growth by 10% YoY.
- Riksbank hikes increased Swedish household debt service ratio to 14%.
- Norges Bank rates at 4.5% cooled wage growth to 5.1% in 2024.
- RBNZ OCR hikes reduced property prices by 10% nationwide 2022-2023.
- TCMB 50% rate stemmed lira depreciation to 30% YoY in 2024.
- CBR key rate hikes cut inflation from 17.8% to 8.6% mid-2024.
- Fed tightening cycle 2022-2024 inverted yield curve, signaling recession risk at 60%.
- High US rates increased corporate default risk to 4.5% in 2024.
- ECB rates slowed Eurozone investment by 1.5% in 2023.
- Global high rates per BIS added 0.5% to debt service costs in EMs 2023.
Economic Impact Interpretation
The world's central bankers are engaged in a brutal but necessary global choreography, where every elegant step to tame inflation or prop up a currency invariably stomps on the toes of growth, jobs, or your hopes of ever affording a house.
Forecasts
- The US Fed Funds Rate is projected to be 4.10% by end of 2024.
- ECB Deposit Rate expected to fall to 2.50% by mid-2025.
- BoE Base Rate forecast at 3.75% by Q4 2025 per market consensus.
- RBA Cash Rate projected to 3.10% by end-2025.
- BOJ Policy Rate to rise to 0.50% by 2026, per IMF estimates.
- US 30-Year Mortgage Rate forecast at 6.20% average in 2025.
- Bank of Canada rate to 2.75% by mid-2025.
- SNB Policy Rate expected at 0.50% by end-2025.
- India Repo Rate to remain 6.50% through 2025.
- Brazil Selic Rate projected to 9.00% by end-2025.
- SA Repo Rate forecast at 7.50% in Q1 2025.
- China LPR 1-Year to 3.00% by 2026.
- Sweden Repo to 2.00% by end-2025.
- Norway Policy Rate to 3.25% mid-2025.
- NZ OCR forecast at 4.25% by Q4 2025.
- Turkey Policy Rate to ease to 35.00% by end-2025.
- Russia Key Rate projected at 12.00% mid-2025.
- Fed dot plot shows median 3.90% by end-2025.
- US 10-Year Treasury Yield to 3.50% by 2026 per CBO.
- Eurozone HICP inflation to 2.0% with rates at 2.50% in 2026.
- Global average policy rate to decline to 3.5% by 2026, IMF WEO.
- UK gilt yields 10-year to 3.80% end-2025.
- Mortgage rates in US to average 6.5% in 2025 per Fannie Mae.
- Fed Funds Rate hike probability 5% for July 2024 meeting at 0%.
- ECB rate cut odds 95% for September 2024.
Forecasts Interpretation
Central banks are choreographing a global slow dance toward lower rates, but the music varies wildly—from Turkey's frantic 35% tempo to Japan's glacial rise from zero—revealing a world still deeply divided on how to cure the inflation hangover without crashing the party.
Historical Rates
- The US Federal Funds Rate was set at 5.25% on June 30, 2006, marking the peak of the tightening cycle post-dot-com bubble.
- In 1981, the US Prime Rate reached a record high of 20.50% amid double-digit inflation.
- The Bank of England's Base Rate was 17% in November 1979 during the Volcker-era global fight against inflation.
- ECB's Main Refinancing Operations Rate stood at 4.75% on June 8, 2000, before the dot-com peak.
- Japan's Call Rate averaged 6.00% in September 1990 prior to the asset bubble burst.
- The US 10-Year Treasury Yield hit 15.84% on September 30, 1981, the highest since WWII.
- Fed Funds Rate was 0.16% on average in 2009 during the Great Recession response.
- UK's Base Rate dropped to 0.50% on March 5, 2009, lowest in over 300 years.
- Bundesbank Discount Rate was 7.50% in July 1992 during ERM crisis.
- Australian Cash Rate peaked at 17.00% in November 1989.
- US Mortgage Rates (30-year fixed) averaged 18.63% in October 1981.
- Canadian Overnight Rate was 6.50% in June 2000.
- Swiss National Bank Sight Deposit Rate was 3.50% in April 2000.
- India's Repo Rate was 8.00% on July 31, 2010.
- Brazil's Selic Rate reached 45.00% in March 1998 hyperinflation aftermath.
- South Africa's Repo Rate was 12.00% in June 1998.
- China's 1-Year Loan Prime Rate was 4.35% as of October 20, 2015.
- Eurozone Deposit Facility Rate was -0.50% from December 2016 to September 2022.
- US Discount Rate was 13.00% on August 21, 1981.
- RBA Cash Rate was 0.10% from November 2020 to May 2022.
- Fed Funds Rate target was 1.75%-2.00% on March 16, 2020, pre-pandemic cut.
- BOJ Policy Rate was -0.10% since January 2016.
- Sweden's Repo Rate was -0.50% from February 2016 to December 2019.
- Norway's Sight Deposit Rate was 0.50% from March 2020 to June 2022.
- New Zealand OCR was 8.25% in April 2008.
- Turkey's Policy Rate was 50.00% on March 20, 2024, amid inflation crisis.
- Russia's Key Rate was 20.00% on December 16, 2014.
- Mexico's Target Rate was 11.00% in May 2000.
- Argentina's Policy Rate hit 81.00% in October 2023.
- Poland's Reference Rate was 6.75% on September 7, 2022.
Historical Rates Interpretation
History's lesson is a brutal seesaw, where central banks swing from slaying inflation with double-digit rates in one era to fighting stagnation with negative rates in the next, proving that while the enemy changes, the price of economic stability is always, painfully, high.
Sector Rates
- US average 30-year fixed mortgage rate is 6.89% as of July 4, 2024.
- UK 2-year fixed mortgage rate averages 4.85% in July 2024.
- Average US credit card APR is 24.57% as of Q2 2024.
- New car loan rate (60-month) US average 7.86% June 2024.
- US high-yield corporate bond yield is 7.25% as of July 2024.
- Eurozone AAA corporate bond yield averages 3.10% July 2024.
- Average US CD rate (1-year) is 5.05% APY July 2024.
- Australia variable home loan rate averages 6.70% July 2024.
- Canada 5-year fixed mortgage rate 5.24% July 2024.
- Japan 10-year JGB yield is 1.09% as of July 2024.
- India home loan rate averages 8.95% July 2024.
- Brazil residential lending rate 12.50% June 2024.
- South Africa prime lending rate 11.75% July 2024.
- China 5-year LPR is 3.95% as of July 2024.
- Sweden mortgage rate average 4.20% July 2024.
- Norway consumer loan rate 8.50% Q2 2024.
- New Zealand floating mortgage rate 7.15% July 2024.
- Turkey consumer loan rate 45.00% June 2024.
- Russia corporate lending rate 18.50% Q1 2024.
- US investment-grade corporate yield 5.20% July 2024.
- UK buy-to-let mortgage rate 5.60% July 2024.
- Eurozone covered bond yield 3.40% July 2024.
Sector Rates Interpretation
From Tokyo's tranquil 1.09% to Ankara's staggering 45%, the global interest rate landscape is a stark reminder that the price of money—and the economic stability it signals—varies wildly depending on your postal code.
Sources & References
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