In a December 14, 2015 New York Times article Neil Irwin examines historical interest rate trends. According to Irwin, interest rates have historically remained very low for decades upon decades. He cites statistics indicating that the interest rate on a 10 year Treasury note was below 4% every year from 1876 to 1919 and again from 1924 to 1958. The most glaring exception to that was the 7.3% average in the US from 1970 to 2007.
According to Irwin, interest rates have historically been most tied to inflation. As long as inflation remains low as it is now, interest rates remain low. The Fed and its counterparts overseas have been trying for years to get inflation up to a target rate of 2% with no success. Given the cheap prices for everything from oil to labor, there are no signs of inflationary pressures any time soon. Current Treasury bond prices predict inflation of only 1.7% over the next 30 years.
If Irwin’s analysis is correct, low interest rates will remain the norm for many years to come.