World

The World with Higher Interest Rates

Research series showing how the most aggressive monetary tightening cycle in decades will shape global economic and market outcomes.    

The most aggressive monetary tightening cycle in decades has shaken global markets this year on concerns that central bank efforts to rein in inflation will end in recession. Investors have cause to worry: historical evidence shows how tightening cycles have often ended in economic downturns when inflation needs squeezing out of the system. But could this time be different?

As global tightening got underway, Capital Economics began a special series of research exploring what higher interest rates would likely mean for macro and market outcomes, showing how economies would cope and where risks and opportunities lay in financial markets.

How high will interest rates go?

The World with higher interest rates

How high will interest rates go?

Examining how far above equilibrium rates will need to go to get inflation under control.

Can the world cope with higher interest rates?

The World with Higher Interest Rates

Can the world cope with higher interest rates?

How far would rates have to rise before our forecast for an economic slowdown rather than recession comes under threat.
We expect the dollar to stay strong as the Fed tightens

The World with higher interest rates

We expect the dollar to stay strong as the Fed tightens

Analysis of the greenback's performance during previous Fed tightening cycles suggests there's scope for further gains.
Can EMs weather Fed tightening?

The World With Higher Interest Rates

Can EMs weather Fed tightening?

Although Fed tightening has been associated with EM debt crises in the past, much has changed. However, there are still pockets of vulnerability.
Property the weak link as interest rates rise

The World with higher interest rates

Property the weak link as interest rates rise

A modest rise in rates might only cause price falls in a few obvious candidates. But rates might have to rise only a bit further than we expect to cause more widespread falls.
What to expect from QT

The world with higher interest rates

What to expect from QT

Discussion around the role that shrinking central bank balance sheets will play in meeting policy objectives.

Our latest interest rate coverage

Read our latest research on the impact of higher rates from across our macro and market services.