Global Rising Rates Repercussions (8)

Oil prices can stay high

Oil prices can stay high while rates rise and equity prices rise because real demand generally comes from real productivity demand.

Even if you pay a higher price for a commodity, it still works because the product used generates sufficient improvement in productivity in countries like China and India.

Consuming nations like the US and Japan will have to bear the burden as that will eat into margins without sufficient improvements in productivity.

For Japan, the case is slightly different because it is finally emerging from its deep recession of over 13 years.

Hence the economy can withstand much more rate increases from a very low base.

The smaller Asian nations would be able to better cope with inflation via their appreciating currency.