Six Years of Low Interest Rates in Search of Some Growth; A World of Cheap Money  

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Jenis: Article from Bulletin/Magazine
Dalam koleksi: The Economist (http://search.proquest.com/) vol. 407 no. 8830 (Apr. 2013), page 24-26.
Topik: Interest Rates; Monetary Policy; Bonds; Statistical Data; International

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Perpustakaan Pusat (Semanggi) Nomor Panggil: EE29 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Never in recent economic history have interest rates been so low for so many for so long. It is a safe bet that central banks in America, Britain, the euro zone, Japan and Switzerland will not be increasing short-term interest rates this year. When rates were first cut to their current levels in 2008-2009, it looked like a temporary expedient; now it looks like normality. Businesses and investors are still adjusting to this new world. Low rates have some clear positive economic effects. The Federal Reserve has been buying mortgage-backed bonds as a way of forcing down yields and thus reducing the cost of home ownership. Higher house prices have made people feel wealthier and more willing to spend. Low interest rates have also boosted share prices, with both the Dow Jones Industrial Average and the S&P 500 reaching all-time highs in March. Excessively low rates help to create bubbles because they allow investors to ignore the cost of financing and concentrate on the capital gains if their strategy works; they let people forget risk and focus too much on reward. Despite the problems for some sectors, and the inability, so far, of low rates to make life better for small and medium-sized companies, it seems highly unlikely that any of the big rich-world central banks will tighten monetary policy in the near future. The risk of sending the economy back into recession is too great.

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