Economist Podcasts The Intelligence: higher-for-longer interest rates
Nov 9, 2023
Henry Kerr, Economics editor for The Economist, shares insights on persistent high interest rates and their global implications. Kerry Richmond Jones, an international economics correspondent, analyzes the economic fallout from the ongoing Israeli-Hamas war, specifically its impact on tourism and business in the region. The discussion also explores the surprising resilience of the U.S. economy amid rising rates, as well as cultural reflections in contemporary British literature, particularly Jilly Cooper's provocative new book.
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Interest Rate Reversal
- Interest rates were once thought to be on a long-term downward trend, even going negative in the Eurozone.
- This thinking has shifted, with rates now consistently rising and experts predicting a 'higher-for-longer' scenario.
Bond Yield Implications
- Rising bond yields reflect investor expectations of sustained high interest rates.
- This impacts borrowers, including households, businesses, and governments, who face increased borrowing costs.
Economic Resilience and Vulnerabilities
- Pandemic savings and fixed-rate borrowing have insulated the US economy from the full impact of rising rates.
- However, small businesses are already feeling the effects, and corporate debt will become a drag if rates remain high.
