Okay, okay, maybe that header’s a bit harsh. But we have to ask what the point is of Working Paper No 393, The financial market impact of quantitative easing, from the Bank of England’s Michael Joyce, Ana Lasaosa, Ibrahim Stevens and Matthew Tong?
Joyce et al could have saved some pixels, and simply said: “Dunno.”
Instead, we’ve got 44 pages leading to this earth-shattering conclusion:
The effectiveness of QE asset purchases will ultimately be judged by their impact on the wider macroeconomy. Our analysis suggests that the purchases have had a significant impact on financial markets and particularly gilt yields, but there is clearly more to learn about the transmission of those effects to the wider economy.
Specifically, the Bank academics reckon that in spending £200bn in quantitative easing, the central bank most definitely depressed gilt yields by about 100 basis points. But they just can’t get a firm handle on how all this freshly-printed money impacted the price of other financial assets – most notably equities.
Here’s the table that seems to have foxed ‘em:
That’s right, equities went through the roof.
QE demonstrably had an effect that BoE academics would be wise to bone up on. It’s called inflation.
- – - -
* skiving, to skive