Implications of Unwinding QE

Implications of Unwinding QE

It did not take long after the introduction of QE for market commentators to become overly concerned about a future problem with the policy: what happens when the central banks unwind QE? In this video, Trevor discusses the issues associated with unwinding the policy, the stages of QE and the timing of the unwind.
Overview

This essentially involves a rapidly expanding economy that requires reversing QE in order to slow it down. To do this, central banks can take their time unwinding QE, and use interest rates to tighten policy where necessary. However, associated with this are a wide array of concerns; for example, huge central bank losses.

Key learning objectives:

  • Identify the 4 stages of QE

  • Discuss the biggest concerns of the unwind

  • When is the best time for banks to reduce their balance sheets?

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Summary
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Expert
Trevor Pugh

Trevor Pugh

Trevor has worked in finance since 1995. He started his career in investment banking after studying Law at Cambridge and taking a Masters Degree in Financial Services from University College Dublin. Trevor spent 18 years at Barclays investment bank where he became a Managing Director and head of Gilt trading. He currently works as Chief Operating Officer for a hedge fund.

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