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We are living in a period of ultra-easy monetary policy, with extremely low interest rates, yet inflation remains persistently low. What does this mean? FT columnist Martin Wolf writes that nobody knows.

The Bank of England was founded just over 323 years ago, in July 1694, at the instigation of King William III. It is the second oldest continuously-functioning central bank in the world, after Sweden’s Sveriges Riksbank, founded in 1668. ….

Prior to January 2009, the Bank had never lowered its lending rate below 2 per cent. But it was then lowered to 1.5 per cent, on its way to 0.5 per cent in March 2009 and 0.25 per cent in August 2016. ….

Throughout this prolonged recent period of ultra-easy monetary policy, the concern has never been one of runaway inflation, but rather of the opposite. This time really has been different. What does it mean for the future? Nobody knows.

Martin Wolf, “Nothing like this has happened in 323 years“, Financial Times, 16 August 2017 (gated paywall).

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