It is official: the US Federal Reserve will do whatever it takes to get the economy going again. It has cut interest rates, effectively, to zero. It has vowed to use all other available tools. It wants markets to think inflation might be coming. After all, should that happen investment will switch out of cash and into other assets, such as loans, that generate real economic activity. By contrast, the world’s two other major central banks are taking a more reluctant route to 0 per cent rates. The Bank of Japan, to be fair, has little left to cut. The European Central Bank, though, is positively dragging its feet. Jean-Claude Trichet, the ECB’s president, has even suggested he is no hurry to cut again.

Markets are not convinced by such inaction. They are pricing in a high probability that the BoJ will shave 20 basis points off its 0.3 per cent rate this week. Once its rates hit the floor, Japan will need to re-enter the realms of unconventional monetary policy to boost liquidity. Its need to act is reinforced by a surging currency. The trade-weighted yen has appreciated by almost 30 per cent this year, punishing exporters. Calls are growing for currency intervention, last attempted in 2004, although the minister of finance has denied that is a possibility – so far.