Why will interest rates remain low?

English2019. szept 17.GOVERNOR MATOLCSY100WORDS

Low interest rates really changed everything in the last decade (Bloomberg Businessweek, 29 July 2019). And they will remain with us for a long period of time. This is not a new abnormal and there is no return to the former “normal” higher rates and yields. The Fed is forced to make a U-turn and the ECB might go deeper into negative territory. Why?

There are two reasons for this. There is more money globally than needed and the rate of inflation for the developed world is well below zero in reality. Low, even negative, rates and yields still offer positive real returns.

Governor Matolcsy, MNB, the central bank of Hungary

Re “Low Rates Changed Everything

By Liz Capo McCormick with John Gittelsohn, Christopher Anstey, Ben Holland, and Michelle F. Davis

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