Unwinding quantitative easing

Stephen Grenville

Research output: Contribution to specialist publicationGeneral Articlepeer-review

Abstract

Chairman Bernanke’s hints about the end of quantitative easing (QE) have produced volatility in financial markets. This column argues that financial markets were startled because an end to QE is likely to cause capital losses for bond holders since term premium is substantially negative. Bank regulators should be alert to the possibility. This fundamental explanation is teamed with widespread confusion among market participants about how quantitative easing actually works.

Original languageEnglish
Specialist publicationVoxEU
PublisherCentre for Economic Policy Research
Publication statusPublished - 22 Jun 2013
Externally publishedYes

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