LETTER: Why QE will only make matters worse
Quantitative easing will not solve SA's problems of high wage pressure and inefficient SOEs raising public debt
23 June 2020 - 17:08
There has been much talk about quantitative easing (QE) being the easy solution to SA’s financial problems, without understanding its underlying purpose.
QE is about the central bank buying massive amounts of bonds from the commercial banks and infusing them with unremunerated cash balances as an incentive for them to lend more. It is largely a form of money supply management and stands as an alternative method of conducting monetary policy in opposition to inflation targeting, which relies on using the policy interest rate to manage monetary conditions...
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