The world’s central banks are quickly back tracking on their plans to increase interest rates as equity markets plunge.

Traders now believe not one G7 central bank will have the confidence to raise rates in 2016. Instead of tightening monetary policy the odds are growing central banks will reserve policy and implement negative interest rates.

The change in expectation follows a dramatic fall in global equity markets. After thirty years of gradually falling interest rates perhaps this comes as no surprise. Since the collapse of Bear Stearns in 2008, central banks around the world have cut rates on 637 occasions. As recessionary forces take hold central bankers are running out of ammunition to fight the next economic crisis. Negative rates and more quantitative easing could soon be on the horizon.

Ever since the 1987 equity crash, central bankers have constantly tried to control the market. By doing so they have disrupted the market and acerbated the boom bust cycle. Their constant intervention has caused capital to be misallocated at levels never seen before. Asset prices have been driven to record levels and should this unwind the global economy could fall into prolonged recession.