Policy change on rates likely

The ‘Great Recession’ of 2008-2009 and the subsequent sluggish and uneven pace of recovery from it, has seen many central banks cut interest rates to record low levels of between 0% and 0.5%.

They have also employed non-standard monetary policy easing measures to boost economic growth. These have included quantitative easing and forward guidance that interest rates can remain low for a prolonged period.

It has been an unprecedented period of monetary easing. The weak inflationary environment and outlook for a continuation of very low inflation has allowed central banks to pursue such a loose policy.