QT does not produce opposite effects to QE, evidence suggests
BoE study considers implications of 1980s ‘overfunding’ for policy-makers today
A study published by the Bank of England on the use of “overfunding” as a monetary policy tool in the 1980s has found that the policy had countervailing effects on inflation and money growth.
Author David Ronicle argues that this finding offers a valuable insight for policy-makers today – that “the different channels of quantitative tightening [QT] can be exploited to calibrate the aggregate effects of balance sheet unwind”.
In the working paper, published on May 22, Ronicle acknowledges the
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