Stealth QE and YCC are here now

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‘Not-QE, QE’ and ‘Not YCC, YCC’

 

After being crushed over the past 18 months, Global Liquidity is bottoming and turning higher. Financial stability concerns have helped to loosen policy and further gains will be spurred by policy easing as economic recession bites. Paradoxically, renewed QE-type policies operated in tandem by Central Banks and Finance Ministries may be preferred over aggressive cuts in policy interest rates. Our take supports a policy rate regime of ‘higher for longer’. The US seems to be leading the way with a ‘stealth QE’ post-SVB and latest talk of Treasury buybacks. More QE will come. After bailing-out US banks, the US Fed will soon have to bail-out the US government. The future fiscal arithmetic is challenging.

 

 

See our latest published research, Global View: ‘Not-QE, QE’ and ‘Not YCC, YCC’ – 16th June 2023

 

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