Floors and ceilings

In the 2010s the idea that central banks could always generate inflation was challenged. In the 2020s the idea that they can always lower it will come under pressure.

For more than a decade much of the debate in monetary policy has been about floors but over coming months the talk will begin to turn to ceilings. Rather than pondering how low rates can go, the discussion will turn to how high they can reach.

The floor on central bank policy rates turned out to be a lot lower than many observers expected. Negative rates…