The adjustments that the return to higher nominal and real interest rates will impose

OECD countries will return to an environment of higher nominal and real interest rates as inflation and inflation-targeting monetary policies return. We must then try to understand everything that will have to be added to this new environment, i.e. everything that will have to return to the situation before the period of very low interest rates. This concerns: Debt ratios and leverage effects, which rose especially sharply during the low interest rate period in the case of corporate debt (since 2020) and public debt (since 2008); Asset valuations (equities, real estate, companies), which rose particularly sharply in the low interest rate period in the case of real estate prices and corporate valuations; Corporate investment, which was stimulated in particular during the low interest rate period in the case of US corporate investment. H ousing investment , in contrast, fell; Risk premia, which were squeezed by strong demand for risky assets resulting from the very low level of risk-free interest rates in the case of credit spreads and equity risk premia in the United States. This suggests there is going to be a real watershed in financial and real estate markets.