slowing population growth across the globe could have a major impact on real interest rates according to new research from jp morgan with more old people saving for retirement and fewer young people borrowing for things like properties cars and education demographics are weighing heavy on interest rates in a trend that is set to continue jesse edgerton a senior economist at jp morgan and author of the report told cnbc the slowdown in population growth which weve been seeing for decades in both developed and emerging markets is a reason to expect lower real interest rates edgerton told street signs asia thursday his evidence the history of economic development really he said interest rates on the decline in developed nations japan europe and the us have all experienced declining real interest rates in recent decades as birth rates and gross domestic product gdp have fallen and life expectancy rates have risen in tandem china is now fairly far down that path said edgerton referring to its slowing birth rate and aging population emerging markets where population growth remains higher can expect to follow suit as they develop over time he added thats because money is not being put to work in the same way driving down returns and interest rates said edgerton slow population growth essentially means that theres excess capital in the world theres excess money searching for yield and all that money that people are trying to save its going to push down interest rates its going to push down returns on capital he said the shifting interest rate outlook has implications not only for savings accounts and assets like bonds which are directly correlated to interest rates but also equities and real estate falling rates could mean lower average pricetoearnings pe ratios said edgerton pe ratios are used to determine valuation and high pe ratios could mean the asset is overpriced or that investors predict strong future growth i do think we should expect higher pe ratios to be the new normal in this world of lower population growth he noted and while a declining population growth is not necessarily a bad thing overall said edgerton it does mean saving for retirement could become even more elusive moving forward if youre living in a world with lower population growth you should expect to earn lower returns on your assets when youre saving for retirement you might be needing to set aside more he said