Posted: Jan 09, 2017
The Bank of England asked two key questions last December – first: how far have ‘real’ interest rates (that’s after allowing for erosion by inflation) fallen globally? Second: how likely are they to stay at their current low levels? The Bank argued that the fall in real interest rates over the last 30 years was driven by a mix of changes including population aging and increased levels of saving especially in emerging markets. They thought these trends would persist and didn’t see interest rates rising much for some time either.