In an environment of ultra low interest rates, the economic cost of being late is low.

Some central banks began to raise interest rates pre emptively, albeit in small steps to counter the risk of potentially higher inflation in 2005, signalling the end of the low inflation, low interest rate environment of the last two years.

Today s low interest rate environment is causing a flood of financial flows to emerging economies, raising the risk of inflation and asset bubbles.

Interest rates are already low.

But it is clear that in an environment of slow growth, low interest rates, and high risk premia, many banks must struggle to survive.

The Long Mystery of Low Interest Rates

Do Low Interest Rates Ensure High Asset Prices?

Interest rates on government debt are still low.

Low interest rates did not cause the bubbles.

Indeed, America has been the single biggest beneficiary of this freakish low interest rate environment, with everyone seeming to borrow money like it is going out of style.

Ultra low interest rates may persist for some time.

Moreover, the Greek government s interest payments are exceptionally low.

Emerging market interest rate spreads now are abnormally low.

Start with the question of whether central banks that have spent decades establishing and maintaining anti inflation credibility can generate faster price growth in an environment of low interest rates.

Back then, Europeans complained that low interest rates in America were driving global inflation now low US interest rates are blamed for driving irresponsible asset price booms.

And the Fed has continued its low interest monetary policy.

But the banks are profitable ongoing enterprises in the current low interest rate environment, because they typically engage in short term borrowing and longer term lending at higher rates, with leverage.

This bonanza has largely been the result of an extraordinarily positive international environment. Commodity export prices are at record levels, global liquidity has been ample, and international interest rates have been low.

The World Bank s traditional instruments have been (and still are) low interest loans, interest free credits, and grants.

One reason for a rise in the interest rate would be a shift from low deflation to low inflation.

Keeping interest rates low discouraged capital inflows and encouraged asset price inflation.

But you wouldn t know this from the low level of media interest.

Low interest rates strengthen the ability to pay, and thus boost demand.

But today s low interest rate dynamic is not an entirely stable one.

The world s major industrial economies, meanwhile, are maintaining very low interest rates.

Moreover, low long term interest rates are a thing of the past.

European interest in military intervention in Africa is as low as ever.

Indeed, worries about rising protectionism in a low growth environment are on target.

It already provides sustainable produce with low food miles while protecting the environment.

Similarly, a potential downside to quantitative easing is that low interest rates send capital to higher growth, high interest rate countries.

Policymakers initially resorted to government spending and low interest rates to boost demand.

Government debt service has in general become easier, owing to low interest rates.

We know that extremely low real interest rates produce massive expansion of credit.

When other countries guarantee repayment, it is hoped, low interest rates will return.

Current low interest rates do not cover the risk that banks would take.

For example, sustained low interest rates hurt savers who traditionally prefer safe short term investments. Pensioners and those near retirement, facing low income from interest, may cut back further on consumption, weakening the economy.

Many of them still rank low in various governance and business environment indicators today.

Japan s slow growth and low interest rates over the past two decades are emblematic.

Reckless budget deficits can lead to a weak currency so can low interest rates.

However, in the Fed s defense, low interest rates were needed to maintain the expansion.

Macroeconomic policy can try to compensate through deficit spending and very low interest rates.

Another interpretation is that awash with liquidity merely means that interest rates are low.

But interest rates on US Treasury securities are very low and are not rising.

SOEs will lose their low interest loans, subsidized land, monopoly protection, and privileged housing.

The right interest rate for the French and Italians is too low for the Germans.