Investors are warning that the world economy is entering a “new era of fiscal dominance,” in which governments’ swelling debt burdens and higher long-term interest rates begin to curb central banks’ ability to set policy independently, according to the Financial Times. The concerns are being driven by the sharp climb in borrowing costs: 30-year UK gilt yields have reached 5.6%, their highest in more than 25 years, while equivalent US Treasury yields hover around 4.9%. The OECD expects high-income countries to issue a record US$17 trillion of sovereign debt this year, adding further pressure on funding markets. Economists and fund managers quoted in the article say the political incentives created by larger interest bills could push central banks to keep policy rates lower for longer, slow balance-sheet reduction programmes or even resume bond purchases—moves that risk reigniting inflation and undermining monetary-policy credibility. Market pricing already reflects those expectations: US futures show traders betting on five quarter-point Federal Reserve rate cuts next year despite relatively resilient growth projections. Harvard professor Kenneth Rogoff cautions that prolonged fiscal dominance could erode confidence in major reserve currencies and drive investors toward inflation hedges such as gold.