World Interest Rates AND Reasons For Interest Changes

World Interest Rates:- Country Name	Current Rate	Previous Rate	Change	Last Change
Australia	3%	3.25%	-0.25%	Dec 05 2012
Brazil	7.25%	7.50%	-0.25%	Oct 10 2012
Canada	1%	0.75%	0.25%	Sep 08 2010
Chile	5%	5.25%	-0.25%	Jan 13 2012
China	6%	6.31%	-0.31%	Jul 05 2012
Colombia	4%	4.25%	-0.25%	Jan 29 2013
Czech Republic	0.75%	1%	-0.25%	May 06 2010
Denmark	1.25%	0.75%	0.50%	Jul 08 2011
Egypt	9.25%	8.25%	1%	Nov 24 2011
European Monetary Union	0.75%	1%	-0.25%	Jul 05 2012
Hong Kong SAR	0.50%	1.50%	-1%	Dec 17 2008
Hungary	6%	6.25%	-0.25%	Nov 27 2012
Iceland	6%	5.75%	0.25%	Nov 14 2012
India	8%	8.50%	-0.50%	Apr 17 2012
Indonesia	5.75%	6%	-0.25%	Feb 09 2012
Israel	1.75%	2%	-0.25%	Dec 24 2012
Japan	0.10%	0.30%	-0.20%	Dec 19 2008
Korea, Republic of	2.75%	3.25%	-0.50%	Oct 11 2012
Malaysia	3%	2.75%	0.25%	Jul 08 2010
Mexico	4.50%	4.75%	-0.25%	Jul 17 2009
New Zealand	2.50%	3%	-0.50%	Mar 09 2011
Norway	1.50%	1.75%	-0.25%	Mar 14 2012
Philippines	3.50%	3.75%	-0.25%	Oct 25 2012
Poland	4.50%	4.75%	-0.25%	Nov 07 2012
South Africa	5%	5.50%	-0.50%	Jul 19 2012
Sweden	1.25%	1.50%	-0.25%	Sep 06 2012
Switzerland	0%	0.25%	-0.25%	Aug 03 2011
Taiwan	1.88%	1.75%	0.13%	Jul 01 2011
Thailand	2.75%	3%	-0.25%	Oct 17 2012
Turkey	5.75%	6.25%	-0.50%	Aug 05 2011
United Kingdom	0.50%	1%	-0.50%	Mar 05 2009
United States	0.25%	1%	-0.75%	Dec 16 2008

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Reasons For Interest Changes:-

Deferred consumption

When money is loaned the lender delays spending the money on consumption goods. Since according to time preference theory people prefer goods now to goods later, in a free market there will be a positive interest rate.

Inflationary expectations

Most economies generally exhibit inflation, meaning a given amount of money buys fewer goods in the future than it will now. The borrower needs to compensate the lender for this.

Alternative investments

The lender has a choice between using his money in different investments. If he chooses one, he forgoes the returns from all the others. Different investments effectively compete for funds.

Risks of investment

There is always a risk that the borrower will go bankrupt, abscond, or otherwise default on the loan.

This means that a lender generally charges a risk premium to ensure that, across his investments, he is compensated for those that fail.

Liquidity preference

People prefer to have their resources available in a form that can immediately be exchanged, rather than a form that takes time or money to realize.

Taxes

Because some of the gains from interest may be subject to taxes, the lender may insist on a higher rate to make up for this loss.

Output and unemployment

Interest rates are the main determinant of investment on a macroeconomic scale. Broadly speaking, if interest rates increase across the board, then investment decreases, causing a fall in national income. A government institution, usually a central bank,(RBI) can lend money to financial institutions to influence their interest rates as the main tool of monetary policy. Usually central bank interest rates are lower than commercial interest rates since banks borrow money from the central bank then lend the money at a higher rate to generate most of their profit.By altering interest rates, the government institution is able to affect the interest rates faced by everyone who wants to borrow money for economic investment. Investment can change rapidly in response to changes in interest rates and the total output.

Money and inflation

Loans, bonds, and shares have some of the characteristics of money and are included in the broad money supply.By setting it, the government institution can affect the markets to alter the total of loans, bonds and shares issued. Generally speaking, a higher real interest rate reduces the broad money supply. Through the quantity theory of money, increases in the money supply lead to inflation.

From the above article you can see that in the Developed Countries ie;(USA,UK,Switzerland,Japan,New Zealand,) Or Developing countries( Mainly India),, they are on the the wheels of regularly reducing tha interest rates on Savings And Deposits to Boost up the economy ..

In india also,, it is Observed that in last RBI Policy,that there in pressure on RBI to reduce rates.. 

I would strongly suggest you to SAVE with GUARANTEED INTEREST Rates Schemes of LIC

Chakravarthi LIC

chakri_pkkc@yahoo.com, 

  licchakri@gmail.com

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