(Bloomberg) -- Former International Monetary Fund chief economist Kenneth Rogoff sees interest rates heading higher in coming years, with the yield on the 10-year Treasury note averaging above 4% for the rest of the decade.

“Real interest rates are going to be higher and probably inflation’s going to be higher,” he said in an interview with Bloomberg Television’s David Westin and Romaine Bostick for Wall Street Week. You could “certainly see having a nominal rate that could be north of four for the 10-year rate though the decade.”

The yield on the 10-year Treasury note is currently trading around 3.7%. It averaged 2.4% during the US economic expansion from 2009 to 2020.

Rogoff portrayed the rise in real, inflation adjusted rates as a reversal of the sharp decline seen after the financial crisis more than a dozen years ago. 

The Harvard University professor sees real rates on average settling in at “somewhere between one and two” percentage points, probably in the middle of that range. That compares with a rate of around a half percentage point prior to the pandemic, according to many economists.

On top of that, Rogoff said the Fed will have trouble containing inflation at 2%, though he doesn’t expect the central bank to abandon that target.

“I don’t think the Fed is going to have easy time navigating keeping inflation down to 2% in this changed world” of bigger government debt, higher defense spending and populist pressures, he said.

©2023 Bloomberg L.P.