The aggregate real global policy rate is still firmly negative due to the commitment to low interest rates in the major G4 economies,
Still, we are seeing notable divergence between countries.
Emerging economies largely remain among the economies with positive real rates, but even this picture is not uniform as high inflation in India (using CPI as opposed to WPI) and Turkey ensures a negative real interest rate in these two economies. Developed market commodity currencies such as Australia and Canada still have positive real rates, but the differential with the US has come in significantly in the past 12 months.
Japan remains in deflation and thus has a positive real rate, but the trend here is firmly towards negative real rates as monetary and fiscal stimulus kicks in later this year. And finally, we cannot escape mentioning the UK sitting firmly towards the lower end of the scale with deeply negative real interest rates. Indeed, the UK remains the text-book example of stagflation with low to negative growth and monetary policy unable to generate anything but higher inflation. The recent mooting of negative deposit rates at the Bank of England is not a surprise, and would be used as a tool to make real rates more negative, and to weaken sterling.