Risks await in raising interest rates

FEATURE - If central bankers are 100 per cent sure that interest rates need to start rising, it is probably too late reports Tuesday's Financial Times.

The decision to begin tightening monetary policy usually requires a leap of faith, and in many cases nerves of steel. The nub of the problem is that everyone knows there is a lag between a change in interest rates and an effect on economic activity, but no one knows exactly how long that lag is.

Central bankers have to assume that the effect of

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