IMF economist: central banks may have misdiagnosed secular slowdown

IMF HQ 2
Henrik Gschwindt de Gyor/IMF

The decline in neutral rates over the past few decades may have been inadvertently caused by central banks lowering rates in the hope of boosting demand, a paper published by the International Monetary Fund argues.

Central banks may have “misdiagnosed” the long-term slowdown, the researcher claims. And the low interest rate medicine they prescribed may have actually led to lower investment levels and further exacerbated the slowdown.

In the paper, Bas Bakker, a division chief in the IMF

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