CNBC’s report of a JP Morgan analysis is to me the best explanation for continuing low interest rates.
“Slowing population growth across the globe could have a major impact on real interest rates, according to new research from JP Morgan.
“With more old people saving for retirement and fewer young people borrowing for things like properties, cars and education, demographics are weighing heavy on interest rates in a trend that is set to continue, Jesse Edgerton, a senior economist at JP Morgan and author of the report, told CNBC.
“The slowdown in population growth, which we’ve been seeing for decades in both developed and emerging markets, is a reason to expect lower real interest rates,” Edgerton told “Street Signs Asia” Thursday.
“His evidence? “The history of economic development, really,” he said….
“’Slow population growth essentially means that there’s excess capital in the world. There’s excess money searching for yield. And all that money that people are trying to save — it’s going to push down interest rates, it’s going to push down returns on capital,’ he said.”