Central banks' efforts to return to normal interest rates will be slower and lower than in the past, Scott Mather, deputy chief investment officer at Pimco, told CNBC.
"We have slower growth as well as an overhang of debt," Mather said. "That means (central bankers') journey to a normal policy rate is also going to be very slow and the destination is going to be much lower in terms of a neutral rate relative to what we're used to in the last couple of decades."
He expects central bankers will aim toward zero percent real policy rates, compared with the current negative real rates, well below "normal" real rates of around 2 percent, with a 4-5 percent nominal policy rate, that were common in decades past.
Pimco, which has nearly $2 trillion under management, has dubbed its outlook the "new neutral," and it's the reason its funds are betting on five-year U.S. Treasurys, he said.