Quantitative Easing Is a ‘Dangerous Addiction’
— July 20, 2021
By Mervyn King
Inflation is what we now have: 5.4% in the U.S. and 2.5% in the U.K., with more to come. This acceleration of prices is more than central banks were expecting. Recently they’ve begun to backpedal on commitments to their strategy of “lower for longer,” made when low inflation was expected to continue almost indefinitely. That’s a start, but a deeper rethink of when and how to use QE is called for.
The Economic Affairs Committee of the U.K.’s House of Lords, of which I’m a member, has just issued a report on the challenges of using large-scale bond purchases as an instrument of monetary policy. Its title pointedly asks: “Quantitative Easing: A Dangerous Addiction?” In a word, our answer to that question is “yes.”
Read the full Bloomberg Quint article.
Lord Mervyn King is the Alan Greenspan Professor of Economics and a professor of Economics and Law, a joint appointment with New York University School of Law.