International race to lower interest rates

Interest rates are falling around the globe. At the beginning of 2019 it still looked as if the just started normalization of monetary policy, starting with the US Federal Reserve, would gradually be transferred to the other central banks of the world. Today, on the other hand, the signs are that interest rates will be cut again worldwide.

Following the Fed’s latest rate cut, various other central banks have in any case also made a move in the direction of expansive monetary policy. For example, the monetary authorities in India, Thailand, New Zealand, Brazil and Peru have followed suit and increased the degree of expansion of their monetary policy. The ECB will probably announce a major package of measures in September.

Political pressure on the US Federal Reserve is likely to remain high in the coming months. Other central banks could then follow suit again. However, if this supposed race for the loosest monetary policy continues, the central banks can only lose.

The times of extremely low yields on the bond markets should therefore continue, and the situation could even worsen. This makes investing in equities, especially those with a high dividend yield, appear even more lucrative.

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