Rising Interest Rates Threaten Global Economy with Financial Crisis

The rising interest rates in major economies, including the US, are causing concern among economists and financial analysts. The Financial Times reported that since the increase in bond yields, which started with the US war on Iran in February, the 'cost of borrowing for the world's biggest economies [has risen] by tens of billions of dollars.'

The G7 economies have already taken a hit of $16 billion in additional debt financing costs since the war began and could be faced with a total of an extra $34 billion by the end of the first quarter of next year if the rise in yields persists.

Mohit Kumar, chief European economist at Jefferies, warned that 'Rising rates are one of the biggest risks to equity and credit markets.' He noted that if the yield on the 10-year bond continued to rise and hit 5 percent, it would result in a 'negative reaction' in equity markets.

Kenneth Rogoff, former International Monetary Fund chief economist and now Harvard economics professor, commented on the rise of debt and interest rates. He noted that there was a 'near religious conviction' among academics and government circles that interest rates were going to go 'down and down and down,' but this view has been proven wrong with rising interest rates.