More Easing Will Make the World Weaker Rather Than Stronger

With the evolution of economies over time, there are some countries for whom cutting interest rates from already very low levels is likely to suppress, rather than stimulate, demand. This is now the case for major developed nations. The latest round of monetary easing, likely to continue with the European Central Bank on Thursday and the Federal Reserve next week, may make the global economy weaker rather than stronger, the Financial Times reported. During the global financial crisis, central banks, led by the Fed, acted as lenders of last resort and steadied a fragile financial system. In this critical role they were imaginative, aggressive and very effective. In the decade since, they have implemented unprecedented monetary stimulus, both conventional and unconventional, in an effort to boost aggregate demand. Read more