Don’t wait too long to normalise balance sheets – Bailey
Central banks may need to unwind balance sheets ahead of raising interest rates when they tighten monetary policy, Bank of England governor Andrew Bailey said.
There could be risks to not fully normalising the balance sheet before a future negative shock occurs, Bailey told the Jackson Hole conference today (August 28). If a shock occurred in the future, making quantitative easing necessary, it could lead to a ratcheting-up of central banks’ balance sheets, he said.
That might be practical
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