This report examines the harmful long-term effects of artificially low interest rates in the aftermath of the global economic crisis. The author argues that this has had a detrimental impact on pensions, house prices and savings, creating a sense of unfairness by rewarding the wealthy and penalizing low-income savers. He suggests that failure to change direction will lead to even greater damage, and concludes that:
- if the leading central banks signal and then coordinate a gradual increase in bank rates, this will prevent the triggering of a currency war;
- the question of central bank independence should be revisited under parliamentary scrutiny, and
- monetary policy should return to normal, although this will expose today’s politicians to difficult decisions.