Economics
The Fed and ECB Confront a New Normal That Looks a Lot Like Japan's
- Fed and ECB find it difficult to roll back their stimulus
- Rates are low, balance sheets big -- and there’s no way out
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Central bankers in the U.S. and Europe are reconciling themselves to a new normal of historically low interest rates and bloated balance sheets -- one that Japan has long since gotten used to.
The European Central Bank announced on Thursday that it will keep rates at record lows into next year, and restart a cheap loan program for banks, as a weakening economy derails its plan to withdraw stimulus. The Federal Reserve already put further rate increases on hold in January, and made clear it plans to stop reducing the $4 trillion portfolio of assets it built up fighting the financial crisis a decade ago.