Once unthinkable, zero and negative interest rates have been the mainstay of monetary policy, particularly since the subprime crisis of 2007/08. Never mind that it was the low interest rates that led to the housing bubble and crisis in the first place. More than reducing the cost of debt, repressed interest rates being a deliberate distortion gave rise to perverse incentives. Very conveniently, ultra-low interest rates were blamed on a global savings glut, emanating largely from the exporters of East Asia. Central banks use printed money to buy debt instruments, thereby pumping money into the system.

Source: The Edge Markets November 11, 2022 15:32 UTC