Despite talk of easy money as the 'new normal', it is likely the cheap financing for indebted countries is ending

Since 2007, the financial crisis has pushed the world into an era of low, near zero, interest rates and quantitative easing, as most developed countries seek to reduce debt pressure and perpetuate fragile payment cycles. But there is a strong risk that real (inflation-adjusted) interest rates will rise over the next decade.

The total capital assets of central banks worldwide amount to $18 trillion, or 19 percent of global GDP twice the level of 10 years ago. This gives them plenty of ammunition to guide market interest rates lower as they combat the weakest recovery since the Great Depression. In the United States, the Federal Reserve has lowered its benchmark interest rate 10 times since August 2007, from 5.25 percent to a zone between zero and 0.25 percent, and it has reduced the discount rate 12 times (by a total of 550 basis points since June 2006) to 0.75 percent. The European Central Bank has lowered its main refinancing rate eight times, by a total of 325 basis points, to 0.75 percent. The Bank of Japan has twice lowered its interest rate, which now stands at 0.1 percent. And the Bank of England has cut its benchmark rate nine times, by 525 points, to an all-time low of 0.5 percent.