Ah, for the good old days of quantitative easing when central bankers agreed what needed to be done to spur economic growth. No longer. In Tokyo, Haruhiko Kuroda, Bank of Japan governor, has just reiterated that he will not rule out a “deepening cut” to the country’s negative interest rates. In contrast, Mark Carney, Bank of England governor, has announced he is “not a fan of negative rates” and Thomas Jordan, president of the Swiss National Bank, has reaffirmed his belief that its “current approach”, including negative rates, “is the right one”. Meanwhile, Janet Yellen, chair of the US Federal Reserve, told Congress in May that “while [she] would not completely rule out the use of negative interest rates”, they would be a last resort.

This is too much fuss over just another policy instrument. The drama and division among central bankers reflect two intellectual errors that have distorted monetary policy discussions. These are the same mistakes that led to the demonisation of quantitative easing as “unconventional” and thus dangerous, when in fact it worked pretty much as expected in reducing interest-rate spreads, encouraging riskier asset purchases and adjusting the currency.Negative rates will prove less universally applicable but have also proved predictable and useful in impact.

The first error is believing that the majority of financial decisions will respond significantly to any shifts in government borrowing costs. In pre-crisis days, policymakers assumed that tweaking short-term interest rates was enough to influence all important financial decision-making. This was wishful thinking, based on a couple of decades of atypical US experience. Other economies still needed extra policy instruments, as has the US since the crisis. The absence of stable relationships between credit growth and interest rates, as well as the history of central banking, should have told policymakers and investors that government bond markets were not the only game in town.