The high interest rates most economies are seeing right now are not here to stay, said the International Monetary Fund, adding that once inflation is controlled, rates will once again approach previous ultra-low levels.
This means that after the most aggressive synchronized monetary policy tightening in decades, interest rates will begin to drop and approach"zero lower bound" levels in advanced economies while developing economies also see a steady decline.The"natural" level of rates"will remain low in advanced economies or decline further in emerging markets," the IMF noted.
"Natural rates in advanced economies will likely remain low. As emerging market economies adopt more advanced technology, total factor productivity growth is expected to converge to the pace of advanced economies. When combined with an aging population, natural rates in emerging market economies are projected to decline towards advanced economies' rates over the long term," the IMF said.
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