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 increased spending on AI. Surging oil prices, exacerbated by geopolitical tensions in the Middle East, are further driving inflation concerns and bond yields.
Why it matters
Rising bond yields directly increase the cost of consumer loans and mortgages, potentially slowing global economic growth.
Image source, Getty Images By Michael Race Business reporter , Reporting from New York Published 2 hours ago 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 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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