End of Easy Money Brings a $410 Billion Global Financial Shock
Inflation is pushing central banks to shrink their balance sheets as they hike interest rates, adding a new risk for the world economy.
Their new policy, known as quantitative tightening — the opposite of the quantitative easing that central banks turned to during the pandemic and the Great Recession — will likely send borrowing costs higher and dry up liquidity.
Already, rising bond yields, falling share prices and the stronger U.S. dollar are tightening financial conditions — even before the Fed’s push to raise interest rates gets into full swing.
Bloomberg 1 May 2020
The U.S.’s big economic red alert this week was the surprise GDP contraction
The World’s Economic Outlook Turns Grim
Bloomberg 1 May 2020
US GDP fell at a 1.4% annualized rate
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