The level of the real equilibrium rate is determined by a number of structural factors, such as a country’s demographic situation or capacity to innovate. [5] The real equilibrium interest rate cannot be directly observed and instead has to be estimated.
And almost all estimation methods show that the real equilibrium interest rate in the euro area has fallen markedly over the past 20 years (Slide 10). Indeed, many estimates have even been showing negative values in recent years.