6. Use of selective nominal interest rates in such a way that interest rates on loans for speculative activities would be greater than the rates on loans for productive activities, and resulting weighted real interest rates for savings would be positive.

He has cut short term interest rates to the bone.

First, while the US Federal Reserve continued hiking short term interest rates, long terms rates did not increase in tandem, which allowed housing prices to continue rising.

Second, China s central bank still controls interest rates by enforcing a roughly three percentage point spread between deposit rates and lending rates.

Under the current system, the fixed differentials between interest rates on deposits and those on loans translate into monopolistic profits for commercial banks.

Sometimes we rely on our judgment in combining interest rate action with open market operations.

Hence, real long term rates remained quite high in the mid 1980 s.

Now they are calling on their central banks to ensure stability by, for example, raising short term lending rates.

It may have had something to do with the near total lack of response of long term interest rates to monetary tightening.

One oft heard justification for high asset prices is that real (inflation adjusted) long term interest rates are very low.

But this time, even as the US Federal Reserve keeps hiking its short term lending rate to keep inflation in line, long term interest rates which are far more important have been magically declining.

Third, consumers are generally not adept at dealing with interest rate risk.

Short term market interest rates will fall, but, as investors begin to recognize the ultimate inflationary consequences of very loose monetary policy, longer term interest rates will rise.

Domestic financial reforms will focus on strengthening policy coordination and moving toward market determined interest rates and exchange rate flexibility.

A great puzzle in today s world economy is the continued low level of long term real interest rates in the United States.

Interest Rates

The Trouble With Interest Rates

Interest paid on credits withdrawn during the biennium

This means extending the maturity dates of debts and reducing the interest rate on the new debt to levels much lower than currently unsustainable market rates.

However, late last year, Everbright Bank and some others began offering fixed rate mortgages. Take up has been slow, but the April 2006 surprise hike in bank rates may help to sow greater public awareness of interest rate risk.

Three major factors are impeding policymakers from raising interest rates to market clearing levels.

In short, we simply shouldn t read too much into the decline in real long term interest rates over the last 20 years.

That could cause their interest rates to spike upward and their national debts to rise rapidly, thus making them effectively insolvent.

Thus, the market can establish the necessary interest differential only if interest rates on yuan assets fall below their dollar equivalents.

Central banks respond to lowered demand by reducing interest rates and to higher expected inflation by raising interest rates.

The interest rates on loans to brokers at the stock exchange soared to 70 and, with brokers unable to get money, stock prices fell to a low not seen since December 1900.

Lower demand for Greek debt caused its price to fall, meaning that its yield in terms of market interest rates rose.

At a time when Americans owe more in tuition debt than credit card debt, this Congress needs to stop the interest rates on student loans from doubling in July.

Meanwhile, interest rates on bank loans to nonfinancial enterprises remain close to 7 , despite having fallen slightly over the last year. And, in the second quarter of this year, the annualized interest rate on loans to small nonfinancial corporations surpassed 25 .

With so much internal liquidity, these businesses are not sensitive to reductions in market interest rates.

Indeed, America has been the single biggest beneficiary of this freakish low interest rate environment, with everyone seeming to borrow money like it is going out of style.

Low long term interest rates have kept the region s debts manageable, while high consumer demand has helped bid up prices for the region s commodity exports.

In this case, the price of loanable funds is the real interest rate. An expectation that interest rates will be high sometime in the next decade should mean high interest rates on long term bonds today.

A Good Rate Hike for Europe

US Interest Rates Will Continue to Rise

When Interest Rates Rise

The Long Mystery of Low Interest Rates

Will Rising Interest Rates Torpedo Stock and House Prices?

Doing so will require maintaining some capital account control, while raising interest rates to market clearing levels.

An expectation that interest rates will be high sometime in the next decade should mean high interest rates on long term bonds today.

But micro financiers may have no choice given the small size of the loans, the costs of processing them and collecting payments are relatively large, driving up the break even interest rate.

Ordinarily, rapid global growth translates into high long term interest rates that is, unless, deep down, people have become nervous.

The ECB s announcement of a new program to purchase sovereign bonds has lowered market interest rates.

People with fixed rate mortgages are also vulnerable to rate increases, though less directly.

Do Low Interest Rates Ensure High Asset Prices?