Long-term interest rates, the rates that matter, are set by markets and not by bankers. The bond and foreign exchange markets are crucial balancing systems for the world economy, as this month’s turmoil shows.

But central banks - even for quite small countries - can throw a spanner in the works. They just need to use stealth and take markets by surprise.

On Wednesday, Sweden’s Riksbank announced a rise in rates, and warned for the future. Nobody foresaw this. 10-year Swedish bond rates went above 4.5 per cent on the news. Three months ago they were 3.7 per cent.

Then the Bank of England published minutes showing that only the narrowest possible margin, 5-4, voted down a rate hike last month. Nobody foresaw this either. The news took sterling back above $1.99, and to a 15-year high against the yen. 10-year gilts now yield 5.5 per cent, up from about 4.75 per cent three months ago.

And the Reserve Bank of New Zealand, after intervening in the forex market last week, surprisingly let the kiwi move higher. The kiwi, popular with speculators who borrow cheaply in yen and park in a high-yielding currency, was last this high against the yen in 1989.

Extreme forex moves distort the outlook for whole markets. If you feel optimistic, use euros rather than dollars to measure ominously surging oil prices. In dollars, West Texas Intermediate crude has quadrupled in the last six years. Its rise in euros is barely half this. So high oil prices may be more specific to the US than first appears.

Pessimists take the view of the yen adopted by Tim Lee of pi Economics. Japan has had virtually no inflation for years, so he says this makes the yen a good stable measure of value. Priced in yen, the German DAX is up 36 per cent since March, and up 374 per cent in four years; Australia’s S&P/ASX is up 32 per cent since March, and 62 per cent in a year. Markets that looked healthy in their local currency appear instead to be gripped by euphoria.