Connect with us

Markets

Charted: IMF Forecasts for International Interest Rates

Published

on

chart showing IMF forecasts for international interest rates through 2028.

Charted: IMF Forecasts for International Interest Rates

With inflation impacting markets and international interest rates for more than a year, how are different central banks expected to act in the future?

Although the outlook on inflation remains uncertain, the International Monetary Fund (IMF) expects most advanced economies to begin gradually easing interest rates by mid-2024.

These charts show the IMF’s projected central bank policy rates for four major economies through 2028, using the World Economic Outlook forecast data as of October 2023.

Interest Rates Forecasts for 4 Major Economies (2024‒2028)

Since 2022, interest rates have climbed in the EU, the UK, and the U.S. by at least 4 percentage points.

In 2023, rates have continued to climb at a slower pace and are expected to peak at the start of 2024. The U.S. Federal Reserve, for example, is expected to see interest rates peak around 5.4% before beginning to implement rate cuts in Q3 2024.

Fiscal Quarter 🇺🇸 U.S.🇪🇺 EU🇯🇵 Japan🇬🇧 UK
2022Q10.2%-0.6%0.0%0.8%
2022Q20.8%-0.6%0.0%1.5%
2022Q32.2%-0.1%0.0%2.6%
2022Q43.7%1.2%-0.1%3.7%
2023Q14.6%2.2%0.0%4.3%
2023Q25.0%3.1%0.0%5.1%
2023Q35.3%3.6%-0.1%5.6%
2023Q45.4%3.9%-0.1%5.9%
2024Q15.4%3.9%-0.1%6.0%
2024Q25.4%3.8%-0.1%5.9%
2024Q35.3%3.8%-0.1%5.7%
2024Q45.0%3.8%-0.1%5.5%
2025Q14.4%3.6%-0.1%5.3%
2025Q24.1%3.4%-0.1%5.1%
2025Q33.8%3.1%0.0%5.0%
2025Q43.5%3.0%0.0%4.8%
2026Q13.1%2.8%0.1%4.7%
2026Q22.9%2.7%0.1%4.6%
2026Q32.9%2.7%0.1%4.6%
2026Q42.7%2.7%0.1%4.5%
2027Q12.6%2.7%0.1%4.4%
2027Q22.6%2.7%0.1%4.4%
2027Q32.6%2.6%0.1%4.4%
2027Q42.6%2.6%0.1%4.3%
2028Q12.6%2.6%0.1%4.3%
2028Q22.6%2.6%0.1%4.3%
2028Q32.6%2.6%0.1%4.3%
2028Q42.6%2.5%0.1%4.3%

On the other hand, Japan has held interest rates at 0% or slightly lower since 2016.

Despite the Japanese yen falling and inflation (and prices) in the country continuing to climb, the Japanese economy as a whole has struggled over the past few decades with weak consumer demand. There are worries that raising interest rates will make economic recovery tougher in the long run.

And as other central banks plan to start cutting rates, Japan is poised to do the opposite. In 2025, the country is forecasted by the IMF to see its first positive interest rates in nine years.

It’s important to remember that future rate cuts will largely depend on whether inflation in countries continues to decelerate. Major developments, such as the Israel-Hamas war, can also disrupt global markets and force central banks to change course.

Click for Comments

Markets

U.S. Debt Interest Payments Reach $1 Trillion

U.S. debt interest payments have surged past the $1 trillion dollar mark, amid high interest rates and an ever-expanding debt burden.

Published

on

This line chart shows U.S. debt interest payments over modern history.

U.S. Debt Interest Payments Reach $1 Trillion

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

The cost of paying for America’s national debt crossed the $1 trillion dollar mark in 2023, driven by high interest rates and a record $34 trillion mountain of debt.

Over the last decade, U.S. debt interest payments have more than doubled amid vast government spending during the pandemic crisis. As debt payments continue to soar, the Congressional Budget Office (CBO) reported that debt servicing costs surpassed defense spending for the first time ever this year.

This graphic shows the sharp rise in U.S. debt payments, based on data from the Federal Reserve.

A $1 Trillion Interest Bill, and Growing

Below, we show how U.S. debt interest payments have risen at a faster pace than at another time in modern history:

DateInterest PaymentsU.S. National Debt
2023$1.0T$34.0T
2022$830B$31.4T
2021$612B$29.6T
2020$518B$27.7T
2019$564B$23.2T
2018$571B$22.0T
2017$493B$20.5T
2016$460B$20.0T
2015$435B$18.9T
2014$442B$18.1T
2013$425B$17.2T
2012$417B$16.4T
2011$433B$15.2T
2010$400B$14.0T
2009$354B$12.3T
2008$380B$10.7T
2007$414B$9.2T
2006$387B$8.7T
2005$355B$8.2T
2004$318B$7.6T
2003$294B$7.0T
2002$298B$6.4T
2001$318B$5.9T
2000$353B$5.7T
1999$353B$5.8T
1998$360B$5.6T
1997$368B$5.5T
1996$362B$5.3T
1995$357B$5.0T
1994$334B$4.8T
1993$311B$4.5T
1992$306B$4.2T
1991$308B$3.8T
1990$298B$3.4T
1989$275B$3.0T
1988$254B$2.7T
1987$240B$2.4T
1986$225B$2.2T
1985$219B$1.9T
1984$205B$1.7T
1983$176B$1.4T
1982$157B$1.2T
1981$142B$1.0T
1980$113B$930.2B
1979$96B$845.1B
1978$84B$789.2B
1977$69B$718.9B
1976$61B$653.5B
1975$55B$576.6B
1974$50B$492.7B
1973$45B$469.1B
1972$39B$448.5B
1971$36B$424.1B
1970$35B$389.2B
1969$30B$368.2B
1968$25B$358.0B
1967$23B$344.7B
1966$21B$329.3B

Interest payments represent seasonally adjusted annual rate at the end of Q4.

At current rates, the U.S. national debt is growing by a remarkable $1 trillion about every 100 days, equal to roughly $3.6 trillion per year.

As the national debt has ballooned, debt payments even exceeded Medicaid outlays in 2023—one of the government’s largest expenditures. On average, the U.S. spent more than $2 billion per day on interest costs last year. Going further, the U.S. government is projected to spend a historic $12.4 trillion on interest payments over the next decade, averaging about $37,100 per American.

Exacerbating matters is that the U.S. is running a steep deficit, which stood at $1.1 trillion for the first six months of fiscal 2024. This has accelerated due to the 43% increase in debt servicing costs along with a $31 billion dollar increase in defense spending from a year earlier. Additionally, a $30 billion increase in funding for the Federal Deposit Insurance Corporation in light of the regional banking crisis last year was a major contributor to the deficit increase.

Overall, the CBO forecasts that roughly 75% of the federal deficit’s increase will be due to interest costs by 2034.

Continue Reading
Voronoi, the app by Visual Capitalist. Where data tells the story. Download on App Store or Google Play

Subscribe

Popular