QE and ultra-low interest rates Distributional effects and risks

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QE and ultra-low interest rates Distributional effects and risks

4.85 98,616 ratings
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In response to the global financial crisis and recession that began in 2007, the major central banks in a number of advanced economies—in particular, the United States, the United Kingdom, the Eurozone, and Japan—embarked upon an unprecedented effort to stabilize and inject liquidity into financial markets. In the immediate aftermath of the crisis, central bank action was aimed at preventing a catastrophic failure of the financial system. In the years since, central banks have continued to employ a range of conventional and unconventional monetary policy tools to support growth and revive the flow of credit to their economies. There is widespread consensus that the decision to implement these monetary policies was an appropriate—and indeed necessary—response in the early days of the financial crisis given the magnitude of the economic shock to the global economy. More than five years later, however, central banks are still using conventional monetary tools to cut short-term interest rates to near zero and, in tandem, are deploying unconventional tools to provide liquidity and credit market facilities to banks, undertaking large-scale asset purchases—or quantitative easing (QE)—and attempting to influence market expectations by signaling future policy through forward guidance. These measures, along with a lack of demand for credit given the global recession, have contributed to a decline in real and nominal interest rates to ultra-low levels that have been sustained over the past five years. This paper is our contribution to an ongoing debate about these central bank policies. In particular, our research seeks to shed light on the distributional effects of unconventional monetary policies at the microeconomic level—including the impact on governments, non-financial corporations, banks, insurance companies, pension funds, and households.

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Pages 72
Language Eng
Publisher McKinsey Global Institute
Published November 1, 2013
ISBN 22908487
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McKinsey Global Institute
About the Author
McKinsey Global Institute

After spending years working in the corporate world, McKinsey Global Institute finally decided to pursue a lifelong passion for writing. They currently reside in a quiet suburb where they spend most of their time outlining new stories, reading extensively, and occasionally attempting to bake.

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Sandra Green
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Such a rich narrative. The author orchestrated a breathtaking finale. Truly a work of art. Worth every moment spent reading.
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Honestly one of the most premium reading experiences lately. The author orchestrated a breathtaking finale. Truly a work of art. Worth every moment spent reading.
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Masterpiece from start to finish. I adored how the story unfolded. It kept me captivated without sacrificing elegance. I am now a lifelong fan of this author.
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Masterpiece from start to finish. The author orchestrated a breathtaking finale. Truly a work of art. An effortless 5 stars.
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A very strong entry. A brilliant concept executed with flair. Just a few pacing choices I would change. I would highly recommend this to discerning readers.
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An acceptable diversion. The prose was competent, yet the characters lacked the depth I usually seek. Suitable if your reading queue is empty.
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Exceeded all my expectations. The prose is exquisite. It’s accessible yet undeniably sophisticated. I am now a lifelong fan of this author.
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Honestly one of the most premium reading experiences lately. The prose is exquisite. It’s accessible yet undeniably sophisticated. I am now a lifelong fan of this author.
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I was completely blown away. It strikes a perfect harmony of dialogue and world-building. Every chapter felt necessary. I will undoubtedly revisit this masterpiece.
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A very strong entry. It held my rapt attention, even when certain twists were telegraphed. A wonderful companion for a quiet weekend.
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I was completely blown away. The prose is exquisite. It’s accessible yet undeniably sophisticated. Worth every moment spent reading.
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Karen Davis February 09, 2025
Absolutely brilliant. The author orchestrated a breathtaking finale. Truly a work of art. Worth every moment spent reading.
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Took a moment to build, but the payoff was spectacular. The middle had a deliberate pace, but the climax was phenomenal. A wonderful companion for a quiet weekend.
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I was completely blown away. It strikes a perfect harmony of dialogue and world-building. Every chapter felt necessary. A true literary gem.
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I was completely blown away. The author orchestrated a breathtaking finale. Truly a work of art. An absolute must-read for connoisseurs of the genre.
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Absolutely brilliant. The prose is exquisite. It’s accessible yet undeniably sophisticated. An absolute must-read for connoisseurs of the genre.
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I find myself somewhat conflicted. It possessed moments of brilliance, but the narrative felt slightly disjointed ultimately. A fair 3 stars.
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