Now that interest rates are at, or near, their peak, attention has turned to how long they will stay elevated. Central bankers, wary of being complacent on inflation, have united behind a mantra of “higher for longer”. Huw Pill, the Bank of England’s chief economist, even chose to compare the UK’s likely rate path to Cape Town’s Table Mountain, with its high, flat top. That reality — reinforced by Friday’s strong US jobs data — is unnerving investors. In recent weeks, stock markets have tumbled, and long-term bond yields have soared.

Economies have, so far, demonstrated resilience in the face of higher rates. But as post-pandemic cash buffers wind down and loans locked in at low rates expire, businesses and households will be squeezed more in the coming months. Rising bond yields threaten deeper turmoil, while slowdowns are already expected across the US and Europe next year. Indeed, with inflation on its way down, having fallen from 40-year highs, rates will eventually need to be cut. Yet hoping that the cost of credit will plunge back to the lows experienced after the financial crisis is foolish.

Structural economic changes could keep price pressures — and interest rates — higher in the long term. Rising protectionism means globalisation may not be the deflationary force it once was. Spending on the climate transition, ageing populations and defence means fiscal policy will continue to prop up demand. A greying workforce will add to existing labour shortages. For the coming years at least, policy rates are set to remain raised: Fitch Ratings forecasts the US Federal Reserve, European Central Bank and BoE to end 2025 with rates between 3 and 3.5 per cent. The shift away from a diet of cheap money will have significant economic implications.