Low rates worldwide cannot last

How long can today’s record-low, major-currency interest rates persist? Ten-year interest rates in the United States, the United Kingdom and Germany have all been hovering around the once-unthinkable 1.5 per cent mark. In Japan, the 10-year rate has drifted to below 0.8 per cent. Global investors are apparently willing to accept these extraordinarily low rates, even though they do not appear to compensate for expected inflation. Indeed, the rate on inflation-adjusted US Treasury bills (so-called “TIPS”) is now negative up to 15 years.

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