Real rates will have to be lower than r* to stimulate the economy. Another key implication is that the structural factors holding down r* are neither expected to be short-lived nor to reverse anytime soon. Therefore, lower rates are probably here to stay for even longer than justified by the business cycle.
Low interest rates and low growth present challenges for pensions Continued easing of monetary policy and lower structural interest rates will intensify the challenges currently facing institutional investors and the pension system in particular. These challenges are further compounded by the gloomy outlook for growth, as well as demographic developments.