Global monetary policy in action

Left: Sources: Bloomberg and Wells Fargo Investment Institute. Quarterly data from January 1, 2007 to September 30, 2021. Fed = Federal Reserve. BOJ = Bank of Japan. ECB = European Central Bank. GDP = gross domestic product.

Right: Sources: Bloomberg and Wells Fargo Investment Institute. Monthly data from January 1, 2000 to September 30, 2021. Headline central bank policy rates of selected countries. Refi = refinance. Min = minimum. RMB = Chinese Yuan Renminbi.

Key Takeaways

  • Expansion of central bank balance sheets has created ample liquidity supporting the recovery in the past year, led by the Bank of Japan’s soaring balance sheet to counter deflation and the pandemic’s impact.
  • Central bank stimulus has outpaced that of the Global Financial Crisis in 2008–2009, judging from the low benchmark interest rates among global central banks. Asset growth at the Federal Reserve and the European Central Bank could begin to slow as strong economic growth encourages tapering of securities purchases.