Sebastian Diessner for Le Figaro about quantitative easing
Sebastian Diessner, associate professor at the FGGA, recently appeared in an article called 'Inflation: a spring remontée des taux se dessine' (Inflation: a slow rise in rates is emerging) in the newspaper Le Figaro.
In response to the economic crisis caused by the pandemic, central banks across the globe had to provide 'cheap money' to their economies. They have done this successfully, by keeping interest rates very low and by buying bonds, also known as 'quantitative easing' This was also how they responded to the global financial crisis over a decade ago. Now that the world economy is slowly recovering from the pandemic shock, central banks are also thinking about how to end their crisis policies. This is very tricky, however, since we actually have very little experience with this: after the global financial crisis, most central banks did not end their crisis policies, because it was feared that this would create a new crisis. 'If quantitative easing has been a big experiment, the exit from quantitative easing is going to be an even bigger one,' says Sebastian Diessner, an economist at the University of Leiden in the Netherlands. It's all about finding the right pace and balance in terms of gradually removing the cheap money 'mattress' that had cushioned the shocks of the crisis, so to speak.
Read the whole article here (in French)