Monetary easing is finally working, but what happens when the cheap money goes away?
The global economy is finally heading back towards a growth path, according to the latest forecasts from the OECD. GDP in the U.S. is set to grow 2.8 percent next year, against 1.9 percent in 2013. Japan’s economy is forecast to grow 1.4 percent in 2014 after 1.6 percent in 2013 thanks to recent stimulus measures.
Problems could materialise when the time comes to pull back from monetary easing. “At some stage, monetary policy will have to slow its pace and eventually begin to think about exit. This is going to be a very delicate operation. We simply do not know how markets will react to a reversal of the monetary policy stance.”