Future of Interest Rates in Global Economies. Are falling interest rates in structural downturn?

A perspective on interest rates in global economies in next 2-3 decades.
 
author- Shubham Saxena

The world economies are entering into a deflationary period. 
Interest rates is more likely to fall over a long

term for next 1-2 decades. As economies mature interest rates inevitably fall.The US Fed is still grappling with near zero interest rates. Japan and many European countries have kept their policy rate near or below zero. The interest rates of most emerging economies- South Asian countries, India have already been on structural downtrend for last 2-3 decades. 

For instance, in 90's Indian commercial banks used to offer 12-13% on 3-5 year fixed deposits and now it has substantially fall in the range of 6-8%. US Fed in 80's used to offer interest rates as high as 19%, crushed over 3 decades. 

Global trend of interest rates; Eurozone- ECB, Britain, US- US Fed, Japan- BoJ, India-RBI, Engand- BoE

After near zero interest rate, QE is often used as an instrument of last resort by the central banks to spur growth in the economy. Now, FTA (Free Trade Agreement) blocks are assuming overriding positions in order to spur global growth rate. Trade blocs like TTP, TTIP, RCEP and various bilateral and multi-lateral FTAs are taking new shape in the globalised world to prevent it from sliding into the state of protectionism.

To maintain growth, inflation and competitiveness, central banks readily manipulate interest rates as a primary tool. The desperate fall of interest rates is signal that all the other tools, from traditional policies to moral persuasion, have already been explored or are now ineffective to prevent the economy from slipping into deflation and subsequent spiral fall of prices. 
As a last tool to make recovery, central banks resorts to either ultra low interest rates/negative interest rates or QE, qualitative easing. We have seen bond buying program in Japan and US to stimulus growh. The ECB chose to experiment with negative interest rates first before turning to the bond buying program.


Aging Population

Interest rates in any economy is a function of number of savers relative to the number of borrowers. In nations where numbers of savers outnumber borrowers, interest rates are bound to dive down. Such is a case of countries like Japan and Singapore. With continually growing medical science and tech. and supportive old age facilities the life expectancy of both developed and developing countries is increasing. 


Flaw Government Policies

There is another important aspect that is crucial in influencing the interest rates i.e. government policies and regulations. History has witnessed many governments introducing flawed-ineffective policies in the name of social-welfare, de facto political dividends, which actually drains public money for unproductive output. Unworthy people readily get their hands over it; if corporations and individuals frequently find and exploit the loop holes like tax evasion and avoidance, benefits etc. and the system don't take appropriate steps to curb them, the system gets strained resulting an intangible pressure on interest rates to rise. Latin American countries has shown very well how un-orthodox monetary policies and excessive unproductive government policies can plunge the economy.

You will get a good insight in this answer
Jose Geraldo Gouvea's answer to Why are real interest rates in Brazil so high?
For instance if there are frequent cases of tax evasions in a country, government will not get enough tax receipts and this makes government resort to more borrowings to raise money for expenditures.
In a falling interest rate regime, government of some countries tries to shield the investors by introducing various small saving schemes which offers attractive interest rates. It's consequential effect can be seen in case of India, Why, in spite of RBI reducing its repo rate, aren't other banks reducing their base rate?