Global markdown: Why money is on sale

Think of it as a massive global markdown on the price of money.

As investors fret about the prospects of higher interest rates in the U.S., the cost of borrowing is falling in the rest of the world.

The big reason: Central bankers around the world are slashing benchmark lending rates to try to reverse an ongoing slowdown in global growth. Though a convincing recovery has begun to take hold in the U.S., efforts to revive expansion after the Great Recession have faltered elsewhere.

With its economy in crisis, Russia's central bank announced a rate cut Friday—the second this year.

Since January, the list of central banks cutting rates includes Uzbekistan, Romania, Egypt, Peru, Turkey, Canada, the European Central Bank, Pakistan, Singapore, Albania, Australia, China (twice), Denmark, Sweden, Botswana, Israel, India, Poland and—earlier this week—Thailand and South Korea.

The moves come as air continues to leak from most of the world's economy. Japan keeps trying to shake off a decade of stagnation from massive borrowing to support a rapidly aging population. China's leaders are struggling to balance pro-growth policies amid persistent threats of a real estate bubble and the need to restructure a massive pile of bad debts.

And after five years of monetary squabbling, Europe is only beginning to embark on the kind of massive bond-buying program that U.S. central bankers recently wound down after five years of money printing.

Once-hot developing countries like Brazil are now watching their economies slide into reverse. Oil producers Russia and Venezuela have seen their currencies collapse with the price of crude. Central bankers' efforts to shore up growth with cheap money is complicated by the evaporation of inflation. A plunge in crude prices since last summer—which has already cut the price of fuels by roughly a third—is now working its way through oil-consuming economies, further dampening inflation.

"Much lower oil prices have to filter through to industries that buy it, and then be filtered once more to the prices they charge," said IHS Global Insight economist Michael Montgomery. "That all takes time, and will dominate the remainder of the first half of 2015, even if oil remains where it is today."

Read MoreLook for more energy deflation this year

The ongoing slowdown in the rise of consumer prices—known as disinflation—keeps central bankers up at night because they worry that it could lead to a much more dangerous phase known as deflation, when falling prices prompt business and consumers to cut spending as they wait for prices to fall further. Deflation is often a prelude to recession, so the hope is that cheaper money will head off that phase.

Though the downward pressure on the price of money is coming from central banks, the benchmark rates they set are only a suggested retail price—the real cost of money is set by borrowers, lenders, investors and money traders who buy and sell money minute by minute. And with economies slowing in much of the world, the demand for fresh cash has slackened—even as central banks are increasing the supply. That adds further downward pressure on rates.

Central bankers outside the U.S. are also leaning against the strong winds blowing against their currency from the ongoing strengthening of the dollar. For exporting countries, a weaker local currency helps boost profits because it makes a country's products cheaper when sold outside its borders. But it also raises the price of imports, especially goods prices in dollars, as the value of a local currency falls.

Unless and until the rest of the global economy revives, the trend is likely to continue. Much of the strength in the dollar is based on the investment appeal of the U.S. economy compared with the rest of the world. That appeal would become even greater if, as expected, U.S. interest rates begin rising further later this year, boosting returns for dollar-based investments.