"Any attempt to return interest rates quickly to more normal levels would recreate recession conditions," the Bank of England.
Since the Fed's current policy seems unlikely to return interest rates to that level before late 2005, inflation could keep rising for another three years.
When Mark Carney took over at the Bank of England, the big challenge for his governorship was to return interest rates to more normal levels without undermining the UK's economic recovery.
This returned interest rates to zero, but with three important twists.
That in turn means the consequences of returning interest rates to "normal" levels will be all the greater in terms of lost confidence and bad debts.So we are trapped in a world of low interest rates and high asset prices.
That may now require the central bank and government to agree on an inflation target and a plan of wage and price co-ordination to meet it, says Mr Levy-Yeyati.In South Korea President Lee Myung-bak has bluntly implored the Bank of Korea to go slow in returning interest rates, now 2%, to more normal levels.
Managing the process of returning interest rates from record low to more "normal" levels was always going to be a challenging task for central banks.
After decades in which investors could buy short-term government bonds and earn double-digit returns, interest rates in Brazil have dropped.
Mr. Bruckenstein, the newsletter publisher, said that even the snazziest computer programs were no better than the assumptions put into them regarding inflation, investment returns, interest rates, taxes and future earnings.
The retirement-savings decision needs accurate forecasts of lifetime earnings, asset returns, interest rates, tax rates, inflation and longevity; yet very few people have the skills to produce such forecasts".The result may be that many employees face retirement with an income well short of their expectations.
