Passing the baton
17 November 2014
The unexpected announcement on 31st October by the Bank of Japan (BoJ) to increase its Quantitative Easing (QE) program could not have been timed better, coming less than 48 hours after the Federal Reserve concluded their QE program. A week later, ECB President Mario Draghi confirmed that the ECB Governing Council is “unanimous in its commitment to using additional unconventional instruments within its mandate” and formalised an “expectation” that the ECB will increase its balance sheet by €1trn towards early 2012 levels. Given stories circulating prior to the meeting of a bitterly divided ECB, the message was a positive surprise. Thus, the baton of balance sheet expansion has been well and truly passed from the US to Japan and the euro area.