ECB unlikely to hike rates for two years or more

The impact of the ‘Great Recession’ of 2008/09, and the subsequent sluggish and uneven pace of recovery from it, has seen central banks cut interest rates to record low levels of close to 0%.

They have employed non-standard monetary policy measures, including quantitative easing or bond buying programmes, to help boost economic activity.

Last summer, the ECB and Bank of England joined the US Federal Reserve in providing forward guidance that interest rates could remain at low levels for a prolonged period, despite signs of strengthening economic activity. Central banks have been keen to give the recovery in the world economy every chance to gain significant traction. Their loose monetary policy bias has been reinforced by a marked decline in inflation over the past year.