Why are interest rates so low? What are the chances that they will soon rise? These questions matter not just to central bankers and financiers but also to business people, savers and the wider population.
Let us start with the facts. The intervention rates of the four most important central banks of the high-income countries — the Federal Reserve, European Central Bank, Bank of Japan and the Bank of England — are all close to zero. These rates have been extremely low since soon after the worst of the global financial crisis, in September and October 2008.
In addition, all these central banks have expanded — or, in the cases of the ECB and the BoJ, are now expanding — their balance sheets, with a view to lowering interest rates on longer-term government bonds.