Global central bankers confront a nettlesome problem. Attempts to inject fresh life into anemic regional economies are proving increasingly less effective,...
Global central bankers are confronting a nettlesome problem. Attempts to inject fresh life into anemic regional economies are proving increasingly less effective, argues Torsten Slok, chief economist at Deutsche Bank Securities in a recent report titled “QE no longer works”.
Back in 2007, benchmark rates stood at a range of 5.75%-6.25% and the 10-year Treasury note TMUBMUSD10Y, -1.26% yielded 4.68%, according to FactSet data. “Most of the papers below find that it was the announcement effects of QE, which had the biggest impact on long rates and on inflation expectations,” Slok wrote.
Slok says the shock-and-awe stimulus of the past isn’t likely to occur this time around in the 11th year of a history-setting expansion in the U.S. “Given the current level of inflation expectations and the current level of rates, doing QE again is not going to create the same surprise effects,” he wrote.A Jan. 30 academic paper by Markus K. Brunnermeier, Edwards S.
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