Lower real interest rates may be the norm in the European Union as its population ages over the next 30 years. European Central Bank President Jean-Claude Trichet, in an address today at the ABP Pension Summit in Heerlen, Netherlands, said the aging population could trigger a decrease in corporate investments and could depress real interest rates by 100 basis points from now through 2030. Real interest rates may rise as the impact of aging baby boomers disappears.
Mr. Trichet speculated that the aging of the populace will also change demand for saving products and may trigger an increase in demand for fixed income. “In that environment, price stability will be even more important,” he said.
