THIS was supposed to be the year when monetary policy started to get back to normal. Seven years after Lehman Brothers collapsed, central banks were expected to edge away from a policy of near-zero interest rates. But now, with the year almost over, the Federal Reserve has yet to push up rates while other rich-world central banks are focused more on easing than on tightening.
Sweden’s Riksbank extended its quantitative easing (QE) programme on October 28th. Mario Draghi, the president of the European Central Bank, has indicated that further easing may come in December, probably by adjusting the pace, scale or type of asset purchases in its QE regime. More than two-fifths of economists polled by Bloomberg forecast that the Bank of Japan would pick up the pace of its monetary easing on October 30th, after The Economist went to press. Even if policy is kept unchanged, the bank plans to expand the money supply at an annual rate of ¥80 trillion ($664 billion).
The picture in the emerging markets is more mixed. Capital Economics calculates that, on balance, slightly more emerging...Continue reading
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