As with the previous two factors I see no signs of a reversal in this trend. Seventh, recent decades have produced a rising spread between the return on capital and the risk-free rate, which is depressing the risk-free rate even further. Obviously, this phenomenon is connected to risk aversion and can be expected to reverse, at least partially, in response to the current wave of strong confidence in global growth prospects. 1/2  BIS central bankers' speeches  In summary, I see reasons for modest optimism concerning growth in the equilibrium rate. The factors contributing to this new trend will include an increase in growth expectations, a rise in dependency rates, a halt to the increase in inequality, and a decrease in risk aversion. The equilibrium rate will be kept from rising swiftly, however, by a continuing savings glut, a decrease in the relative price of capital, and muted investment in infrastructure projects. These prospects also hold more specifically for the Czech economy, for which we at the Czech National Bank currently forecast the equilibrium real 3-month interest rate to stand at around 1%. Adding the 2% inflation target, this translates to a nominal interest rate of 3% in normal times. Given that the Czech economy is currently doing much better than in normal times, we have room to increase our short-term rate even without a substantial rise in the underlying equilibrium rate. References Holston, Kathryn & Laubach, Thomas & Williams, John C., 2017.
Second, over the next few years the transition to a higher national saving rate is likely to imply a switch of resources from consumption in the private and public sectors to investment and net exports. It will  2  BIS Review 4/2005  not be easy to achieve that while keeping inflation on track to meet the target and maintaining steady growth in output. It is very likely that, when the ONS publish next week their first estimate of economic growth in the final quarter of last year, it will show that the UK economy has now had 50 consecutive quarters of positive economic growth. No other G7 economy avoided falls in output over that period. But we should recognise, as I hope the English cricket team does tomorrow, that reaching a halfcentury is no time for complacency but for renewed concentration. Third, the ability to buy goods from abroad at ever lower prices has kept down inflation at home and sustained faster growth in real incomes and consumption - just as Richard Cobden and John Bright, and the other founders of the Manchester School, argued more than 150 years ago. And it is not just consumers who are paying less for these items. Retailers are too. But the inflation rate of goods and services produced in the UK has been rising modestly for two years or so. That has been offset in large part by a fall in import prices. Although we can influence the former we have little control over the latter.