Central banks fire the second barrel of QE

The financial markets are becoming ever more dependent on the continuing willingness of the central banks to use their balance sheets to rescue the global economy. The central banks are not flinching from their task. In fact, they are in the process of firing their second barrel of quantitative easing at the global crisis. It could prove to be as large as the first barrel in 2008/09. At the time of the 2008/09 crisis, the provision of unprecedented amounts of liquidity by all of the central banks to the financial sector was an essential component of the policy response which stabilised the crisis. And the precipitous cuts in interest rates which followed, along with the first experiments in quantitative easing, helped the global economy to recover in 2009/10. But at that time the central banks were not acting alone. Governments also used their balance sheets to cushion the depth of the recession, as the private sectors took urgent steps to reduce debt. Now, governments are trying to reduce the growth of their balance sheets by tightening fiscal policy, leaving the central banks as the only remaining actor in the rescue operation.

Link...