Global debt is keeping a lid on interest rates

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Livewire Markets

Markets remain uncertain and volatile in the wake of Janet Yellen’s decision to keep US rates on hold. With risk assets searching for direction Livewire spoke with Vimal Gor, Head of Income & Fixed Interest at BT Investment Management, to get his views on where interest rates are headed and the factors he believes are most influential on central bank decision making. Gor says, “I wouldn’t be surprised if interest rate bond yields are pretty much unchanged now to where they are in two years time. I think it is unlikely any central bank will be able to raise rates materially in the front end and I think we will just be stuck in a range.” Gor says one of the key factors at play are elevated debt levels across the globe, which are now higher than pre GFC levels. “Ultimately if you are in a world that has higher debt levels it can’t handle higher interest rates.” In the full interview Vimal explains why he thinks another round of QE isn't out of the question in the US.

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