Age and interest rates

In this Bloomberg article relating aging populations to lower inflation on age, one of the important relationships in financial macroeconomics is hinted at: the more top-heavy a country’s population pyramid, the lower its interest rates will tend to be.

This is not an absolute rule of course, but if we think of the stereotypes of elderly retirees living off fixed income vs younger workers who need to borrow to invest and grow the economy.

As a quick check on this, I pulled population age structure data from the US census (this specific query) and the 10-year government bond yield data from Trading Economics to come up with the following scatter plot of the relationship:


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