The signals central banks send to the private sector and the information they receive in return could be enough to explain the decline in the natural rate of interest, research published by the Bank for International Settlements finds.

Phurichai Rungcharoenkitkul and Fabian Winkler describe a “hall of mirrors” in which nothing in the real economy changes, but interest rates fall nonetheless. The natural rate or “r-star” refers to the interest rate associated with full employment and output at