Skip to content
Subscriber Only
Opinion
Marcus Ashworth

The Fed Is Headed in the Same Direction as the ECB

Europe's central bank has blazed a $250 billion trail on corporate bonds. The lesson for Jay Powell is that it’s much easier to start buying than to stop.

Follow my leader.

Follow my leader.

Photo: Bloomberg

The U.S. Federal Reserve has started buying corporate bonds in the secondary market, but it isn’t the first of its peers to do so. The European Central Bank has been buying investment-grade corporate debt for more than four years, amassing the equivalent in euros of a $250 billion portfolio. Coincidentally, that’s how much the three-month Fed program will be able to purchase.

The chief lessons from the ECB are that it’s easier to start doing this than to stop and that the immediate benefits of these monetary tools wear off over time.