Investors Worried About ‘Policymakers Gone Wild’

Over the past several weeks, three central banks - the Swiss National Bank, the Bank of England, and the Federal Reserve - decided that they were not having much luck with traditional monetary policy measures and initiated what some have described as the “nuclear option”: quantitative easing (otherwise known as cranking up the government printing presses).

The hope was that by buying mainly longer-dated bonds with money created out of thin air, authorities could unlock frozen credit markets and drive down the cost of borrowing.

Unfortunately, while the initial reaction to each central bank’s announcement was not unexpected, longer-term interest rates have since crept higher in all three three cases, suggesting that investors are worried about the (hyper)inflationary consequences of “policymakers gone wild.”

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