Why it is vital to know whether real and not just nominal interest rates will rise

Real long-term interest rates (calculated as the differential between the nominal long-term interest rate and expected long-term inflation) are currently close to zero in the United States and significantly negative in the euro zone. If this situation continues, it will remain possible to conduct an expansionary fiscal policy, the public debt ratio will not be a problem, asset prices will not fall sharply and public and private investment will not suffer. Whether or not real long-term interest rates will remain low is therefore a very important question. Two factors could lead to a worrying, significant rise in real long-term interest rates: first, how the central banks respond to inflation in the short term; second, investment needs, which may increase sharply in the medium term, in particular with investment in the energy transition, leading to a savings shortfall .