Quantitative easing draws to a close, despite a faltering economy

CENTRAL BANKING can be agonising. The effect of monetary policy on the economy is not immediate, so decisions must be based on expectations for two years’ time. That means putting faith in forecasts that could well turn out to be wrong.

Some soul-searching might be expected at the monetary-policy meeting of the European Central Bank (ECB) on December 13th. Since 2015 it has stimulated the euro-zone economy by buying bonds worth €2.6trn ($3trn) under its quantitative-easing programme. In June it said it planned to stop asset purchases by the end of the year (though it will continue to reinvest proceeds from maturing bonds), and to keep interest rates at their current rock-bottom levels “through the summer” of 2019. Since then, though, economic growth has slowed and inflation, stripped of oil-price rises, has stayed resolutely low. The question is how persistent these developments will be.

After an impressive showing...



via The Economist: Finance and economics Business Feeds

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