The Impact of Quantitative Easing on the Bond Market
In response to the Global Financial Crisis (GFC), the Bank of England and US Federal Reserve (Fed) cut interest rates to near zero and experimented with Quantitative Easing (QE). This was uncharted territory for both policymakers and markets. It was unclear exactly how the policy would work. But the fear of depression and deflation was an even worse prospect.
As major economies begin to recover, and there is growing talk of inflation pressures, one of the biggest questions facing markets is how the end of the Fed’s QE program will impact markets, both globally and in New Zealand.