The Fiscal Cost of Quantitative Easing
In hindsight, it is clear that central banks’ massive bond-buying programs were a colossal mistake. But even at the time, some warned that they carried serious fiscal risks, which are now being realized as interest rates rise.
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ROME – In accumulating massive bond holdings over the course of a decade of quantitative easing (QE), central banks were effectively betting that interest rates would stay low indefinitely. They have lost that wager.