Stanley Fischer: Why are interest rates so low? Causes and implications

Speech by Mr Stanley Fischer, Vice Chair of the Board of Governors of the Federal Reserve System, at the Economic Club of New York, New York City, 17 October 2016.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I am grateful to the Economic Club of New York for inviting me to speak today. My subject is the historically low level of interest rates, a topic not far from the minds of many in this audience and of many others in the United States and all over the world.

Notwithstanding the increase in the federal funds rate last December, the federal funds rate remains at a very low level. Policy rates of many other major central banks are lower still-even negative in some cases, even in countries long famous for their conservative monetary policies. Long-term interest rates in many countries are also remarkably low, suggesting that participants in financial markets expect policy rates to remain depressed for years to come. My main objective today will be to present a quantitative assessment of some possible factors behind low interest rates-and also of factors that could contribute to higher interest rates in the future.