Before the Senate banking committee last week, Ben Bernanke, the Federal Reserve chairman, hinted that, with fiscal policy reaching its limits and “unusual uncertainty” in financial markets, interest rates will need to remain ultra-low for the foreseeable future to boost America's flagging economy.

The case against rate rises seems obvious. Although worries about Japan-style deflation in the US are overblown, deflationary pressures are more worrisome than inflation. Moreover, under normal circumstances, monetary policy can boost growth in a range of ways.

Low rates give households the incentive to save less, and companies to invest more. Demand will revive and laid-off workers will be rehired. Low rates also boost asset prices, giving companies the collateral with which to borrow and banks the capital with which to lend. With low returns to safe assets, investors are in turn pushed to take more risks. Finally, with the Fed's promise of low rates for an extended period, companies and banks can take on short-term borrowing to fund illiquid positions, again prompting investment.