Fed Holds Interest Rates Steady as Kevin Warsh Says Rising Treasury Yields Tighten Financial Conditions 
China Holds Loan Prime Rates Steady for 14th Month as Economic Recovery Remains Uneven 
Brazil Cuts Selic Rate to 14% as Inflation Eases but Risks Persist 
Chile Central Bank Holds Interest Rate at 4.5% as Inflation and Global Risks Persist 
BOJ Minutes Signal More Rate Hikes as Inflation Risks Grow 
Japan Economy Minister Downplays Inflation Risks Despite BOJ Warning 
Eurozone Bond Yields Fall as Oil Slump Eases Inflation Fears Ahead of Central Bank Meetings 
The Eurozone interest rates remain low on account of the European Central Bank holding market grips by setting policy rates or by buying assets on financial markets. However, the market steers not only on the ECB’s movements but depends, as well, on the inflation dynamics and the equilibrium interest rate, which is consistent with stable inflation.
When inflation is too low (high), the central bank steers market rates below (above) the equilibrium level which is ultimately the main determinant of the level of interest rates. The latter is defined by the real return generated by the balance of saving and investment in the economy.
The Eurozone is currently characterized by excess savings, as illustrated by its current account surplus of more than 3 percent of GDP. This situation results from structural factors such as ageing populations, cuts in public investments or poor productivity gains that are out of a central bank’s reach, BNP Paribas reported.
