Interest rates change over time depending on market conditions. They are a popular monetary tool in helping to stimulate the environment in times of economic difficulty or to contract the money supply in times of high inflation.
The last few years of a global pandemic created unique situations for all countries attempting to prevent their economies from collapsing. Therefore, they are adjusting their monetary policies to suit the times. The following are the five countries with the lowest interest rates as of Aug. 11, 2023.
1. Switzerland
The Swiss National Bank reported an unchangedbenchmark of a three-month SARON of -0.75%. Inflation, based on the Consumer Price Index, for 2023 was 1.6% increase versus 2022. GDP growth prediction for 2023 is 0.6% and 1.2% in 2024, due to slower demand due to the Ukraine war. As of Aug. 11, 2023, Switzerland is holding the policy interest rate at 1.75%.
2. Denmark
The primary interest rate in Denmark is the certificate of deposit rate set by the Central Bank of Denmark. As of Aug. 11, 2023, the interest rate is -3.35%. As of August 2023, based on the Consumer Price Index, inflation was 3.1% higher versus last year.
3. Japan
The Bank of Japan reported an unchanged negative interest rate of -0.1%. The government will increase its purchasing of riskier assets and corporate bonds to reduce economic damage.
Interest rates are always set by a country's central bank unless they are part of a specific union, in which case the central bank of that union will determine the rate.
The government is also offering loans against corporate debt as collateral with rates set at 0%. Japan's inflation rate in Aug. 2023 was 2.73%
4. Sweden
The central bank of Sweden reported a benchmark interest rate of3.75%, as of Aug. 11, 2023. The main interest rate in Sweden is the repo rate; the rate at which banks can borrow from the central bank for seven days.
Sweden's interest rate was increased from 0% in Jan. 2020 to 3.75% in August 2023. As of June 2023, Sweden's CPIF (Consumer Price Index with a fixed interest rate) rate was 6.4% while the target was 2%.
5. Spain
Spain is part of the Eurozone, so its interest rate is set by the European Central Bank. The current rate for Spain is set at 4.25%, its rate for the last four years. This is the same rate for the entire eurozone. As of May 2023, Spain's inflation rate was estimated to be 6.1%.
