With interest rates so low, we’re in for a nasty surprise

If another recession comes our way with interest rates at current levels, central bankers will have to get really radical, says John Stepek.

Since 2009, the world's major economies have quietly tried to get one over on one another by using central bank policies to undermine the value of their currencies. A 25% slump in sterling in 2009 helped the UK through the worst of the recession. Japan's post-2012 revival has been helped greatly by the slide in the yen under 'Abenomics'.

In 2014, when he was still barred from doing quantitative easing (QE), European Central Bank governor Mario Draghi assisted troubled eurozone nations by talking down the euro. And even the Federal Reserve largely managed to keep a lid on the dollar until the middle of last year. So it shouldn't be that much of a surprise that China has finally joined the 'currency wars', allowing the yuan renminbi to weaken drastically this week.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.