Global borrowing costs hit fresh highs on oil, AI and inflation
Global borrowing costs have reached multi-year highs due to rising inflation, government debt, and significant investments in AI. Increased oil prices, driven by geopolitical tensions in the Middle East, are further pressuring central banks to consider interest rate hikes.
Why it matters
Rising bond yields directly impact consumer costs for mortgages and loans, signaling potential economic tightening for households worldwide.
Share Save Add as preferred on Google Michael Race Business reporter, New York Getty Images Long-term borrowing costs across some of the word's biggest economies hit fresh highs because of concerns over inflation, government debt levels and spending on Artificial Intelligence (AI).
The interest rate on US borrowing over 30 years hit 5.33% on Tuesday, the highest since June 2007, meanwhile UK long-term debt reached 5.85%. There were similar moves in Germany and Japan.
Interest rates on bonds - which are a type of debt - are known as yields and can directly affect the borrowing costs consumers pay on mortgages, car loans and credit cards.
Rising oil prices are the main driver behind this recent surge in bond yields, as investors fear inflation could spike again.
If that happens, central banks may choose to raise interest rates to cool inflation.
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