Continue our example with the assumption that short-term rates rise another percentage point in year two before stabilizing.
However since a bank only keeps a small percentage of its assets in cash or short-term investments if there is a run on a bank or handful of them the overall faith in the banking system could be rattled.
For every one-percentage-point increase in inflation, the Fed can be expected to raise short-term interest rates by 0.86 of a percentage point, he says.
The Fed has already slashed short-term interest rates by 1.25 percentage points in the past two months, in part to counter the credit turmoil.
He calculates that a 10% drop in the euro has the same impact on growth as a one percentage-point cut in interest rates (assuming that long-term rates also adjust).
Since the end of 2000 short-term rates have been cut more than five percentage points in the U.S.--compare that with two points in the Eurozone (and in the U.K.) and only a quarter-point in Japan.
To reduce interest-rate and default risk, Ms. Benz suggests sticking with intermediate-term muni-bond funds with a high percentage of their holdings in general-obligation bonds, which are repaid with tax revenue.
Over the past three years real long-term bond yields have been on average 1.4 percentage points higher in New Zealand than in Australia.
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Most portfolios for retirees should include some percentage of stocks to address the reality of inflation and to help assist in long-term (albeit more modest) growth.
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The Gallup Organization survey revealed that in the average country in which people were queried, the share of people who preferred self-employment was 12 percentage points higher than the share who said that doing so would be possible in the near term.
According to a poll taken in July, although the mayor leads Mr Ford by 13 percentage points, only 38% of those polled said he deserved to have another term in office.
Since 1916, seven Presidents have won a second term, and all of them exceeded the percentage of the popular vote that they received in their first election.
"I think there are some good research questions about the long term integrity of well bores - it has been shown in the US and Canada that a percentage have not been cemented properly and are going to leak or do leak - that's what I would focus on, " he added.
Expressed as a percentage of total capitalization, long-term debt has dropped to 31%, versus 92% in December of 2002.
In the county as a whole there is an unusually high percentage of pensioners and those with a limiting long-term illness, and 14% of households have no central heating.
In the light of that outlook, the Committee judged at its October meeting that an immediate reduction in Bank Rate of 0.5 percentage points to 4.5% was necessary to meet the 2% target for CPI inflation in the medium term.
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