The jury is out on whether the exceptional monetary polices pursued worldwide have worked to stimulate activity in the real economy, rather than just encouraging risk-taking in financial markets, Australia’s central bank chief on Tuesday.
Reserve Bank of Australia (RBA) Governor Glenn Stevens said quantitative easing had clearly worked to lower borrowing costs across the globe, but it was not clear that this had led to much higher business investment.
“Some would take that to indicate that the unconventional monetary policy has not been all that effective, and too risky; others would see it as a sign that policy did not try hard enough,” Stevens told an economists’ lunch. “Still others, myself among them, remembering that it always takes time for an economy to heal after a financial crisis, and that as usual we don’t know the counterfactual, might simply feel that it is impossible to draw strong conclusions.”
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