'Inflation seems to be moving in different directions across the world, and with that, the policy stances of central banks. This has implications for investors.' IzakOdendaal. Moneyweb InterestRates
The post-Covid inflation surge and accompanying jump in interest rates was a global phenomenon. There were a few important exceptions, notably China and Japan, but almost all other economies experienced broad and sustained price increases, as well as higher interest rates. European countries such as Sweden and Switzerland abandoned negative interest rates, a dramatic reversal after years of sub-zero policies.
In fact, the recent cycle is unusual in that local short-term interest rates, long among the highest in the peer group, lagged. Longer-term interest rates – bond yields – remain elevated in South Africa, not so much because of expectations of what the South African Reserve Bank will do, but because of concerns over government debt. South Africa’s creaky fiscal outlook means there is a massive risk premium built into our bond yields.
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