Skip to main content

Lower interest rates underpin higher asset valuations

US FOMC participants’ median estimate of the level of the federal funds rate in the “longer run” has fallen by 25bp, to a new low of 2.75%. This compares to a median estimate of 4.25% in early 2012. Our view is that such a decline in the longer-run level of the federal funds rate has raised the equilibrium valuations of financial and real assets well above the averages with which they are frequently compared.

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services


Get access