Interest rates are the lowest they have been for 5,000 years.
This was a stunning fact that I learnt from the ABC last night. At first I couldn’t believe it. But I asked my mother-in-law and she confirmed these figures.
Below is the graph the ABC showed to prove it (apparently the figures come from The Financial Times).
The more I looked into this, the more I realised that the all-time-low interest rates that we are constantly being quoted really are true. And that this is likely to continue for some time to come.
Globally, for the past 35 years, interest rates have been dropping.
10-Year Government Bond Yields (%)
Of course, at some point in this century, interest rates will rise. But, when they do, don’t expect sudden rapid increases. The Bank of England estimates that the most it will ever increase rates by will be 0.9 per cent in a quarter (it estimated that the US would be 1.3 per cent per quarter, the Euro-area 0.7 per cent and Japan 0.2 per cent). This is a far cry from the shock rate rises Australia saw in the 1980s.