An era of ultra-low interest rates will return as today's inflation issues becomes a historical blip, the International Monetary Fund (IMF) has said.

The global organisation said that an ageing population coupled with low productivity will tame inflation and lead to interest rates returning to pre-pandemic levels.

The intervention is being viewed as a huge boost to homeowners in the UK.

Soaring inflation, which hit 41-year highs in Britain, has only interrupted a trend for low interest rates, rather than changing the global economic paradigm, the IMF said.

The Telegraph reports that analysis of what perpetuated years of low interest rates following the global financial crisis found that “demographic forces, such as changes in fertility and mortality rates or time spent in retirement, are major drivers of the decline in natural rates”.

Falling productivity growth was also an “important force”, meaning emerging economies converge towards more advanced ones, the IMF said.

IMF economists Jean-Marc Natal and Philip Barrett said: “These factors are not likely to behave very differently in the future, so natural rates in advanced economies will likely remain low.”

Three other factors could also influence rates in countries such as Britain, the US, Japan, Germany and France.

FTSE 100

The UK's top share index, the FTSE 100, was up 45-points at 7,786 shortly after reopening this morning, following the Easter weekend.

Brent crude futures were 0.70% higher at $84.77 a barrel.

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