Different behavior of interest rates in Asian countries

The different expectations regarding economic growth and the monetary policies adopted in each country determine that interest rates, and consequently the cost of credit, behave differently depending on the economy in question, and even that this behavior may differ from the interest rate behavior in the United States.

In this sense, we can distinguish three situations. The first is that of the Japanese economy, which has a zero and negative interest rate in real terms well below the US interest rate. The second situation corresponds to the economies that do not have zero interest rates but have lower interest rates than that of the United States, such as South Korea, China, Malaysia, and Taiwan, as a result of smaller increases than those in the United States or a cut in interest rates as in the case of China. In the third place, we can find cases of India, Indonesia, and the Philippines, whose interest rates are above that of the United States.

The differences in the interest rate or the cost of credit between countries provoke changes in the conditions of access to credit in local currency by companies and individuals with an impact on productive activity, savings, and also movements in the exchange market.