It was seven years ago this week that the collapse of Lehman Brothers triggered a global banking crisis. And yet here we are, still speculating about when interest rates will start to return to anything resembling normal levels.
Today, the US economy is steaming ahead. Granted, it may be having some trouble due to the strength of the dollar – while cheap oil prices have knocked parts of its energy industries – but the dollar’s strength reflects its economic recovery, and cheaper energy costs have a positive effect by bringing down inflation and boosting workers’ pay packets.
Meanwhile, the UK could again be the fastest growing economy in the G7, while pay – which policy makers look at as an indicator of future inflation – is growing at its fastest rate since 2009.
The jobless rate is also at pre-recession levels, and indeed, employment rates have been a stand out success story of recent years. Despite both economies growing impressively, inflation remains low due to highly valued currencies (that make imported goods cheaper) and depressed global commodity prices.
But both of these are temporary factors. A year or so on from the initial price fall, their effect on inflation will wear off and price growth should creep back up towards both countries’ two per cent target.
And so all eyes will be on Federal Reserve chair Janet Yellen tonight, with analysts more or less split on whether her board will choose to hike or hold. The Fed had been odds on for a rate hike until a sell-off in China sparked major swings in global financial markets.
The Bank of England is expected to wait for the Fed to move first, despite statements from policy makers that this would not be the case.
However, the Eurozone only launched its own money printing experiment this year, with the European Central Bank promising to buy €1.1 trillion (£800bn) of assets by next September.
Some economists are even expecting the programme to be expanded. As the US and UK move closer to a new phase in monetary policy, the Continent lags behind the curve.
Perhaps one day we will be able to speculate on a Eurozone rate lift. But as Japan shows, a money printing programme is not always a precursor to higher rates of growth or inflation.