Low interest rates and secular stagnation: Is debt a missing link?

Claudio Borio, Piti Disyatat, 25 June 2014

a

A

Today, the US government can borrow for ten years at a fixed rate of around 2.5%. Adjusted for expected inflation, this translates into a real borrowing cost of under 0.5%. A year ago, real rates were actually negative. With low interest rates dominating the developed world, many worry that an era of secular stagnation has begun (Summers 2013).

Topics: Financial markets, Global crisis, Monetary policy
Tags: debt, global crisis, interest rates, monetary non-neutrality, monetary policy, natural rate of interest, risk-taking channel of monetary policy, secular stagnation

Vox eBooks