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At that stage, the interest rate gap reverses and the market rate exceeds the natural rate.
Unexpected yen appreciation could cause large carry trade exchange-rate losses, as could unexpected closing of the interest rate gap with Japan.
Many banks currently have to pay more than that for deposits, so they do not get the benefit of the interest rate gap even when they do lend.
Foreign portfolio investors own just 1% of government bonds.At least the rate gap has narrowed recently, thanks to government belt-tightening, hawkish noises from the central bank, and, say traders, a bit of arbitrage activity by banks.
"But then the question is: How to manage the rate downwards without provoking a serious sterling crisis?" A rapid movement could ignite inflation, he said, provoking interest rate increases from the Bank of England and widening the rate gap with Europe, just when it should be narrowing.
"The persistence of a large unemployment rate gap between ethnic minority and white youth nonetheless suggests there is a larger structural element to the problem of youth unemployment for ethnic minorities that won't be solved by a stronger economic recovery alone".
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According to an Education Department document, states will have to ensure that schools cannot receive top ratings for accountability if they are not closing 'significant achievement or graduation rate gaps' between different groups of students.
Some countries have very small employment rate gaps between their disabled and non-disabled populations.
"Will we close in a dramatic way, in the next generation, the college graduation rate gaps, and the achievement gaps when people get degrees?" he continued.
In Australia, Bender (2003) analysed non-completions of apprentices and trainees and found completion rate gaps between 11 and 23percentt between part-time and full-time students.
Women of each race have seen their employment rate gaps improve – relative to a 2007 baseline – more than men.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com