Aging populations set to spur higher interest rates, says study – The Columbian

Aging populations are poised to transform the global economy by sparking a jump in interest rates that may set the stage for a showdown between old and young.

So say Charles Goodhart and Manoj Pradhan, painting a sweeping picture of the future economic landscape in a new paper published by the Bank for International Settlements.

The London School of Economics professor and former Morgan Stanley economist push back against the view that an aging population will slow growth and drag down rates. The research contrasts with models cited by the Federal Reserve, which project that inflation-adjusted real rates are intrinsically tied to potential growth.

“The demographic sweet spot is already behind us, and both the equilibrium real interest rate and inflation have probably already stopped falling,” write Goodhart and Pradhan. “Future…

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