Has central banks’ Quantitative Easing (QE) been a blessing or a curse for investors?

After averting a 1929-style global depression in the wake of the Lehman collapse in 2008, central banks in key economies have faced the Herculean task of unwinding their crisis-era emergency measures, involving zero-bound interest rates and large-scale asset purchases.

10 years on, advanced economies have continued to operate below their natural speed limits. QE has reached the point of diminishing returns, while denting the credibility of its principal architects.

In June 2017, former US Federal Reserve Chair Janet Yellen mused that quantitative tightening in terms of balance sheet normalisation would be like “watching paint dry”.

Yet, while the paint was still drying, the Fed was back in panic mode in January 2019, after the stock markets’ cardiac arrest in late 2018 was blamed on the Fed’s rising rates and shrinking balance sheet.