And in most other advanced economies, they are close to zero. This did  Page 1 of 7  not happen overnight. As you can see from this chart, policy rates have been trending downwards since the 1980s. Chart 1: Policy rates have declined across the advanced economies The secular decline in interest rates is no coincidence.
It reflects key underlying economic and financial developments. First, the underlying equilibrium real interest rate, or r* for short, has declined. This is the real rate of interest that balances savings and investments so that inflation remains stable. This chart shows estimates of r* for Denmark, the United States as well as a group of advanced economies.