LONDON, July 26 (Reuters) - Eight years after the global financial crisis and years after the U.S. and UK central banks stopped their “quantitative easing” bond-buying programmes, the amount of QE stimulus being pumped into the world financial system has never been higher.
The European Central Bank and Bank of Japan are buying around $180 billion of assets a month, according to Deutsche Bank, more globally than at any point since 2009, even when the Federal Reserve’s QE programme was in full flow.
If market consensus proves accurate, that total is about to rise by billions, with the ECB, BOJ and Bank of England all expected to expand their QE programmes soon to try and bolster fragile growth and lift stubbornly low inflation.
For a graphics on this:
Global QE: tmsnrt.rs/2aH1xGc
G4 cenbank balance sheets: tmsnrt.rs/2aHvp5i
The $180 billion total is roughly split down the middle between the ECB and BOJ, according to Deutsche, and is based on a rolling 12-month basis.
ABN Amro expects the ECB to increase its QE to 100 billion euros a month from 80 billion and extend the programme by nine months to the end of next year, while JP Morgan predicts the BOJ will up its QE by 25 percent to 100 trillion yen annually.
In light of Brexit and its anticipated negative impact on the UK economy, many analysts now expect the BoE to reactivate its bond-buying programme which has been dormant since 2012. Barclays expects up to a further 150 billion pounds QE.
These are among the most aggressive QE forecasts, and it remains to be seen if they will turn out to be accurate. But with potential global growth its lowest in decades, actual growth struggling to maintain a stall speed pace and inflation still too low for policymakers’ liking, central bank balance sheets are about to get bigger, not smaller.
Reporting and graphics by Jamie McGeever, Editing by Jeremy Gaunt