Another decade of negative real interest rates

The equilibrium level of real interest rates in the global economy may not remain quite as low as of late, but we expect any rise to be gradual and small. With policymakers at the same time taking a more tolerant attitude towards inflation, actual real interest rates look set to stay low for a long time. This will help to sustain high levels of public sector debt but could imperil financial stability by incentivising risk-taking.