Raising interest rates with zero inflation remains a hard sell

London

AMERICANS and Britons bracing themselves for their first interest-rate rises in almost a decade are puzzled: Why are rates about to go up when there's no inflation?

Both the US Federal Reserve and Bank of England (BOE) are proclaiming that they are on the cusp of raising interest rates for the first time in almost a decade.

It may take a few months, but the message they are sending still heavily indebted households either side of the Atlantic is clear: "be warned".

It's not hard to see why near-zero interest rates should be "normalised" when you do a quick economic health check.

After years in the post-credit crisis doldrums, both economies are now growing at brisk annual clips of between 2 and 3 per cent. Jobless rates are near long-term averages …