By Jamie McGeever
Eight years after the global financial crisis and years after the U.S. and British central banks stopped their quantitative easing bond-buying programmes, the amount of QE stimulus being pumped into the world financial system has never been higher.
The European Central Bank and Bank of Japan are buying around $180 billion of assets a month, according to Deutsche Bank, a larger global total than at any point since 2009, even when the Federal Reserve’s QE programme was in full flow.
And if market consensus proves accurate, that total is about to rise by billions more — with the ECB, BOJ and even Bank of England all expected to expand their QE programmes soon to try and bolster fragile growth and lift stubbornly low inflation.
Global QE: tmsnrt.rs/2aH1xGc
G4 cenbank balance sheets: tmsnrt.rs/2aHvp5i
The $180 billion total is roughly split down the middle between the ECB and BOJ, according to Deutsche, and is measured on a rolling 12-month basis.
ABN Amro expects the ECB to increase its QE to 100 billion euros a month from 80 billion and extend the programme by nine months to the end of next year. JP Morgan predicts the BOJ will up its QE programme by 25 percent to 100 trillion yen ($960 billion) annually.
Following Britain’s vote to leave the European Union and the anticipated hit to the UK economy as a result, many analysts now expect the BoE to reactivate its bond-buying programme — dormant since 2012. Barclays expects up to 150 billion pounds ($197 billion) extra QE.
These are among the most aggressive forecasts. But with world growth struggling to avoid an effective recession and inflation still below official target rates in many countries, central bank balance sheets are about to get bigger.
(Reporting and graphics by Jamie McGeever; Editing by Mike Dolan and Jeremy Gaunt)