The policy interest rates of advanced-country central banks are stuck at uncomfortably low levels. This ceiling on the feasible level of interest rates means that when the next recession hits, central banks will have little scope for reducing them. To be sure, certain creative members of the central banking community have experimented with negative interest rates. Thus, when the next recession hits, central banks will again be forced to resort to quantitative easing. If investors sell off massively on the populists’ watch, their political support will collapse.

Source: Mint June 12, 2019 18:22 UTC