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When a rate hike means a rate hike: The world’s five highest interest rates

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  • 19/06/2014
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When a rate hike means a rate hike: The world’s five highest interest rates
Investors may see UK interest rates rise earlier than the 2015 date priced in by the markets, the Bank of England governor Mark Carney and the MPC have warned, but some economies have to cope with much higher rates.

Acknowledging the “great speculation” about the exact timing of the first Bank Rate hike, Carney told City dignitaries last week: “It could happen sooner than markets currently expect.”

This week, the release of the MPC minutes added further to expectations a rate hike may be coming this year, after the committee revealed it was “surprised” about what the market is pricing in.

But while Carney has sent markets into a flurry, there is little argument that he will do anything more than a few rate rises. From its current level of 0.5%, few commentators expect rates to be above 2.5-3% by 2017.

Some regions with much higher growth – and inflation – have to deal with significantly steeper rates.

Below we reveal the five highest rates around the world currently (Source: Trading Economics).

Venezuela

 

banco-central-de-venezuela

Current rate: 16.38%

All-time high: 83.73%

Inflation-ridden Venezuela has set out an aggressive set of policies to stop the “parasitic bourgeoisie” moving capital out of the country. As well as currency controls, the central bank has forced banks to offer interest rates on savings accounts of at least 16%. It hopes Venezuelans will save more, rather than converting income into goods or foreign currencies.

Argentina

 

banco-central-de-la-republica-argentina

 

Current rate: 14.84%

All-time high: 69653500%

In January, Argentina’s central bank attempted to woo investors by hiking interest rates to 25.89%, the highest in more than a decade. The rate has now been revised downwards, but it remains one of the steepest in the world at 14.84%. And nothing beats Argentina’s all-time interest rate high of 69,653,500%.

The central bank’s activities in interest rates are not merely on the macroeconomic scale. The bank announced this month it will regulate rates on personal loans and credit cards in a bid to end “usury”.

Iran

 

iran-central-bank

 

Current rate: 14.15%

All-time high: 19%

With 12-month inflation as high as 45% over the past year, Iran’s interest rate masks an economy where domestic interest rates are increasingly negative in real terms. In an April report, the International Monetary Fund praised the central bank’s line of tight monetary policy and called for further rises. However, due to international economic sanctions, investors are unlikely to be able to play the interest rate game here any time soon.

Brazil

 

central-bank-brazil

 

Current rate: 11%

All-time high: 45%

In addition to stadiums, the World Cup host has been raising interest rates. After nine consecutive revisions upwards, the benchmark Selic rate hit a two-year high in April. The central bank is attempting to combat a surge in inflation.

The country also has a reputation to restore – Standard & Poor’s recently downgraded its credit rating to BBB- for reasons including the economic team’s lack of credibility.

Nigeria

 

central-bank-of-nigeria

 

Current rate: 12%

All-time high: 12%

Nigeria’s central bank remains “very independent”, according to its newly appointed governor Godwin Emefiele – despite the president sacking the previous governor in February. 

Emefiele has already set markets spinning after announcing an aim to cut interest rates to encourage more lending. His predecessor, the outspoken Lamido Sanusi, had suggested he pursued high interest rates in response to lavish government spending. 

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