Two key reasons why real long-term interest rates will remain very low

OECD countries will have to get used to the fact that real long-term interest rates will be very low (negative) for a long time. Indeed, two important mechanisms point in this direction: As long as the money supply is so large, since at equilibrium demand for money must be equal to the money supply, savers must not be penalised when they hold money and not bonds: this requires that long-term nominal interest rates remain very low, probably lower than inflation; Given the energy transition and the associated massive investment needs, real interest rates will have to be kept very low so that these investments, which are often very long-term and with fairly low return, can be made.