August 14, 2023 — What a difference a year makes! In 2021, interest rates were close to zero in the US and the UK, and slightly negative in the eurozone and Japan. They were expected to remain low indefinitely. Remarkably, as recently as January 2022, investors thought that the probability the interest rate would rise above 4.0 % within 5 years was only 12% in the US, 4 % for the euro-zone, and 7 % for the UK [p.45]. Those were short-term nominal interest rates. Correcting for expected inflation, real interest rates were substantially negative and expected to remain so.