Rising income inequality goes a long way toward explaining why interest rates have been and may remain very low into the future, according to new research presented at a conference held by the Federal Reserve Bank of Kansas City Friday.

The paper’s authors said that their finding pushes back at the widely held idea that interest rates, as measured by a concept called r-star, have been held down by demographic shifts, most notably the retirement of baby boomers. R-star describes the level of interest rates that are neutral in terms of its influence on the overall momentum of the economy.

“There has been a large rise in income shares for high income households since the 1980s,” the paper said. “The result has been a large rise in saving by high income earners since the 1980s, which is the exact same time period during which r-star has fallen,” it said.

Persistently low interest rates have been a thorn in the side of the world’s top central banks for a number of years. Given that the rate of interest that has a neutral impact on economic momentum is much lower than it once was, central banks have had to keep rates lower than historical levels and have had less room to lower them to deal with economic stress. That has pushed the Fed and other central banks toward other forms of stimulus like long-term bond buying, something economists and policy makers have struggled to determine the effectiveness of.

Some have accused the U.S. central bank of exacerbating the problem via stimulus efforts that have boosted the value of stocks, home prices and other assets more quickly than these policies have driven income and employment gains for disadvantaged groups. Fed officials, however, broadly reject that argument.

The paper presented at the virtual Fed conference was written by Atif Mian of Princeton University, Ludwig Straub of Harvard University and Amir Sufi of the University of Chicago Booth School of Business. It arrives at a time when income and wealth inequality have been rising around the world.

The paper’s authors write that savings by wealthy Americans are the key force pushing down the overall level of interest rates.

“Between 3 and 3.5 percentage points more of national income were saved by the top 10% from 1995 to 2019 compared to the period prior to the 1980s,” the authors wrote, adding, “This represents 30 to 40% of total private saving in the U.S. economy from 1995 to 2019.” As a result, “the rise in saving by high income households is likely a powerful force putting downward pressure” on r-star, the paper said.

According to the report, the situation is likely to persist.

“Income inequality today remains extremely high relative to its pre-1980 level, and there does not appear to be any reversion in inequality in the near future,” the researchers wrote.

“As a result, according to the rising income inequality view, it is not surprising that current and future expected levels of r-star remain low,” the paper said, adding, “If the inequality view is correct, then it suggests that macroeconomic forecasters should closely track the evolution of inequality when forecasting movements in r-star going forward.”

Write to Michael S. Derby at michael.derby@wsj.com