Very low interest rates have only a temporary effect on growth

It is not surprising that growth in the OECD can weaken at a time when real interest rates remain very low: the reason is that very low real interest rates have only a temporary effect on growth , since: They cause an upward adjustment of the stock of capital, but once this is completed, investment is no longer stimulated; They lead to a rise in asset prices, but once this has happened, wealth effects are stabilised and demand no longer grows faster; They gradually worsen banks’ situation by reducing their intermediation margins and capital. So the initially positive effect of real interest rates on growth later gradually disappears .