SINCE the global financial crisis of 2008, monetary policy has borne much of the burden of sustaining aggregate demand, boosting growth and preventing deflation in developed economies. Fiscal policy, for its part, was constrained by large budget deficits and rising stocks of public debt, with many countries even implementing austerity to ensure debt sustainability. Eight years later, it is time to pass the baton.As the only game in town when it came to economic stimulus, central banks were driven to adopt increasingly unconventional monetary policies. They began by cutting interest rates to zero and later introduced forward guidance, committing to keep policy rates at zero for a protracted period.In rapid succession, advanced-country central banks also launched quantitative easing (QE), buying massive volumes of long-term government securities to reduce their yields.They also initiated credit easing or purchases of private assets to reduce the costs of private-sector borrowing. Most...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.