Consequently, the probability that short-term interest rates may need to be reduced to their effective lower bound at some point is uncomfortably high, even in the absence of a major financial and economic crisis.
Many respectable forecasters have pencilled in a growth rate for 2010 as a whole of 4 per cent or a bit more – that is, they have expected that the sort of the growth already seen for the past nine months or so would continue for the rest of this year.