Lower-for-longer Interest Rates
Interest rates will likely remain near zero in many economies as central banks maintain supportive monetary and liquidity policies, extending a long-lasting period of weak demand and low rates.
  • SUMMARY
  • REPORTS

  • SECTOR IN-DEPTH
    30 Jun 2020|Moody's Investors Service
    Some developments, such as the benefits of lower borrowing costs or challenges from fiscal austerity, will be immediate. Others, such as telemedicine’s potential transformative effect on the healthcare sector or governments’ need to confront new social mandates, will play out over several years.

    PODCAST
    30 Jun 2020|Moody's Investors Service
    Nondas Nicolaides and Simon Ainsworth from the Financial Institutions team discuss the benign operating environment and reduced loan growth facing Swedish banks, amid preserving margins and earnings.​ >> Read the report
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    SECTOR IN-DEPTH
    18 Jun 2020|Moody's Investors Service
    The crisis will likely result in fundamental shifts for economies, societies and companies in the coming years. Potential outcomes include weaker long-term economic growth, a prolonged period of extraordinarily low interest rates, and an acceleration of the digital transformation already under way.

    Podcast
    10 Jun 2020|Moody's Investors Service
    Sean Marion and Louise Lundberg of the Financial Institutions team discuss the five key factors that make banks more or less vulnerable to persistently low interest rates and flattening yield curves.  >> Read Related Report. 
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    SECTOR IN-DEPTH
    24 Apr 2020|Moody's Investors Service
    Low interest rates and investing at or near a market bottom may increase the appeal of pension obligation bonds, but governments must accept higher exposure to investment market volatility.

    SECTOR COMMENT
    16 Mar 2020|Moody's Investors Service
    On 15 March, the Federal Reserve Board (Fed) announced a series of rare weekend actions, including a 100-basis-point cut to the fed funds rate to 0.00%-0.25%.  The Fed’s emergency interest rate cut will pressure banks’ profitability, but the broad policy actions will clearly support banks’ already strong liquidity.
    SECTOR COMMENT
    04 Mar 2020|Moody's Investors Service
    On 3 March, the Federal Reserve Board cut the fed funds rate 50 basis points to its new range of 1.00%-1.25%, a significant reduction in short-term interest rates aimed at countering the coronavirus outbreak's risks to economic activity. The rate cut is credit negative for US banks because it will exacerbate already material downward pressure on their net interest margins and therefore profitability.

    SECTOR COMMENT
    11 Mar 2020|Moody's Investors Service
    On 11 March, the Bank of England (BoE) announced measures including a 50 basis point rate cut to offset the negative economic impact of the coronavirus outbreak. However, the combination of macro prudential tools may not be sufficient to offset an increase in credit risk triggered by a prolonged coronavirus-induced slowdown in economic activity.

    OUTLOOK
    10 Mar 2020|Moody's Investors Service
    Our outlook for US banks remains stable despite the present coronavirus-related weakening in the operating environment, including lower interest rates that will constrain profitability. US banks’ credit strength will continue to benefit from sound capitalization and liquidity, along with fairly low asset risk despite a slowdown in economic activity.

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    SECTOR IN-DEPTH
    27 Jan 2020|Moody's Investors Service
    Real interest rates will remain at historic lows over the next several years, as long-term and slow-moving factors continue to exert downward pressure on the natural rate of interest.
    PODCAST
    27 Jan 2020|Moody's Investors Service
    Colin Ellis and Madhavi Bokil of the Credit Strategy & Research team discuss some of the forces that are dragging down interest rates globally and the policy challenges that the persistent low rate environment pose for major central banks.

    OUTLOOK
    21 Nov 2019|Moody's Investors Service
    We maintain a stable outlook on the US life insurance industry as strong capital levels, a focus on adapting products to a low interest rate environment, and investment in technology counterbalance the headwinds of lower interest rates and heightened risks to the US economy. 
    Latest on Refunding Risk
    SECTOR IN-DEPTH
    23 Jan 2020|Moody's Investors Service
    Five-year speculative-grade refunding needs set a new record of almost $1.2 trillion last year, up 14% on rising revolver and loan maturities that reached $750 billion. While most of the debt maturities are pushed to 2023-24, declining credit quality of the companies that owe this record amount of debt and increase in the number of industries with negative outlooks points to potentially higher defaults in the next downturn.
    SECTOR IN-DEPTH
    23 Jan 2020|Moody's Investors Service
    Five-year bond maturities for US non-financial investment-grade corporates remain flat heading into 2020. Overall, we expect investment-grade issuers will maintain favorable access to the capital markets in 2020.
    SECTOR IN-DEPTH
    23 Jan 2020|Moody's Investors Service
    Canadian non-financial companies have about $92 billion of investment- and speculative-grade bond and loan debt maturing in 2020-2024 – that is down about 5% from 2018.