News

QE in Australia: be careful what you wish for

4 December 2019

As published on AB+F, 2 December 2019

While the recent comments made by Australia’s central banker on quantitative easing was a “welcome dose of common sense,” Quay Global Investors’ Chris Bedingfield assesses a number of myths on the effectiveness of such an approach. 

The recent comments from Phillip Lowe, governor of the Reserve Bank, about the likelihood of negative interest rates and a potential move into quantitative easing (QE) in Australia were a welcome dose of common sense.

We have long held the view that QE will do very little for the Australian economy, perhaps with the exception of a short-term ‘placebo effect’ – a view that is backed by almost 20 years of international QE evidence.

As Dr Lowe noted, there are limitations to the ability of “easy money” from the central bank to stimulate the economy – and, we would add, serious doubts about its efficacy.  Instead, the government should be looking at other, fiscal, measures to achieve its aims.

There are a number of myths about QE ... read more