Andrew Hunt - Investment Commentary May 2015

World leading International Economist, writes a monthly newsletter on the state of the world from an economic, and therefore investment, perspective.

In the May commentary:

"Over the last 20 or so years, global interest rates and bond yields have collapsed to levels that few would have thought possible even in the late 1980s

In theory, zero interest rates should make the price of borrowing cheaper and the opportunity cost of spending money lower (by reducing the implied return to saving) and this was supposed to, in theory, provide a boost to consumer spending and even investment. In practice, though, the zero rate regime can run into a few difficulties. 

At zero or negative interest rates, we find that banks and financial institutions have little incentive to take risk and to actually supply credit to those that might wish to borrow."
 

Read the works here

 

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