Monetary policy for exceptional times

Monetisation of deficit is unlikely to spark inflation

The global financial crisis gave way to a new era in monetary policy where the conventional tools of policy rates were appended to unconventional policy initiatives like central bank asset purchase programmes, forward guidance, purchase of private assets, including corporate debt and commercial paper, among others. The experiment with quantitative easing led to decrease in duration risk and expectations that short-term policy rates would be lower for longer, which led to easing financial conditions and the measures being seen as a proxy for conventional monetary easing.

Criticism of large scale quantitative easing range from impairment of market functions and stoking high