Central banks’ endgame: a new policy paradigm

Amundi Asset Managers /

23-10-2023

Major central banks in advanced economies are continuing the reduction of the large balance sheets acquired since the Great Financial Crisis (GFC). While the Covid-19 pandemic led to a significant acceleration in central bank asset purchases to address pandemic-related lockdowns and disruptions to economic activity, the unexpected rise in inflation has prompted central banks to tighten monetary policy, first by tapering their asset purchases, then primarily through higher interest rates. Now that the policy rate hiking cycle is over or almost over, at least in terms of market expectations, attention could turn to central banks’ balance sheet policies once more.

Central Bank Policies