To read this content please select one of the options below:

US real interest rates are likely to return to trend

Wednesday, January 4, 2023

Significance

Real interest rates -- which matter more for economic activity -- remain negative. Real rates have been declining for centuries. While they are currently negative, this could amount to a short-term deviation from trend.

Impacts

  • Savers seeking income from higher interest rates will be disappointed as there is no evidence for permanently higher future rates.
  • Contradicting the long-term fall in rates, returns to capital invested by firms have risen and there is little sign of this changing.
  • US exporters are suffering the effects of higher rates strengthening the dollar, making their products more expensive to foreign buyers.

Related articles

Expert Briefings logo
Stay up to date
Sign up to the Expert Daily Briefings email alert and receive up-to-the-minute analysis of global events as they happen.
*If your university does not have access to Expert Briefings, visit our information page to find out more.