Interest rates and demographic changes

The natural rate of interest – Past and prospective

WASHINGTON | By Michael Gavin at Barclays | In a recently published chapter of the Equity Gilt Study, we presented evidence that trends in population dynamics has been an important driver of the ‘global savings glut’ that has depressed interest rates and boosted asset prices around the world during the past 30 years. We also noted that the world now faces a demographic inflection point, and that demographic support for saving, and by extension asset prices, should fade materially in the decades to come.