BLACK DEATH: Have low, negative interest rates always been the norm?

Who would have thought it? Low and even negative interest rates have been the norm dating back to the Middle Ages.

According to interesting research from the Bank of England (BoE), the NIRPs and ZIRPs we are experiencing today are not so much of an abberation but rather a continuation of a trend going back as far as the times of the black plague.

And this could result in subzero rates being the new norm.

Here is the chart, courtesy of CNBC:

BoE’s Paul Schmelzing writes:

“Against their long‑term context, currently depressed sovereign real rates are in fact converging ‘back to historical trend’ — a trend that makes narratives about a ‘secular stagnation’ environment entirely misleading, and suggests that — irrespective of particular monetary and fiscal responses — real rates could soon enter permanently negative territory.”

Of course, rates have been mostly set by governments and central banks for centuries, so this may not be too surprising.