The central bank said that it would improve a mechanism used to establish the LPR in order to further lower real interest rates
Relative to what was expected when one of us (Summers) sought to resurrect the concept in 2013, deficits and national debt levels are far higher, nominal and real interest rates
are far lower, and yet nominal GDP growth has been far slower.
Equity prices still look elevated on some traditional metrics, but these may understate the impact of structurally lower real interest rates
," said Colin Ellis, Moody's managing director for Credit Strategy and co-author of the report.
In a speech at the "9th High-Level Conference on the International Monetary System" in Switzerland, New York Fed President John Williams stated: "Shifting demographic trends and a slowdown in productivity are driving slower trend growth and historically low levels of real interest rates
across the globe.
Such decision is explained with the need to maintain anti-inflationary monetary policy, positive real interest rates
and to reduce inflation expectations.
Typically, we do not think about different monetary policy regimes leading to different equilibrium levels of real interest rates
or real GDP.
(2017) consider a panel dataset for 19 countries from 1870 to the present and emphasize how monetary regimes apparently impact real interest rates
over long eras.
Getting the market to absorb those bonds will require higher real interest rates
. All of this could make new savers happy, as returns on savings -- which have been subject to severe financial repression for most of the last decade -- begin to rise.
One long-run factor popular for explaining negative real interest rates
is the low level of productivity growth in the economy.
This paper investigates the drivers of long term real interest rates
This suggests that changes in age profile not only have significant implications for savings, investment, real interest rates
and growth but also for innovation.
That is, virtually all interactions in the marketplace that entail making a choice between spending now and spending later necessarily involve real interest rates
, which specify the real cost of borrowing to make a purchase or, on the flip side, the real gain from saving.