Cen­tral banks make econ­omy vul­ner­a­ble: OECD's White

The Pak Banker - - FRONT PAGE -

Cen­tral banks' ul­tra-loose mon­e­tary pol­icy is putting the world econ­omy at risk, said Wil­liam White, a se­nior ad­viser to the Or­ga­ni­za­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment.

Neg­a­tive in­ter­est rates and quan­ti­ta­tive-eas­ing pro­grams from the US to Ja­pan may have un­in­tended side ef­fects such as higher debt lev­els for both sov­er­eigns and con­sumers, said White, who leads the OECD's Eco­nomic and De­vel­op­ment Re­view Com­mit­tee. Cen­tral bankers have been dragged away from their fo­cus on in­fla­tion as gov­ern­ments strug­gle to gen­er­ate sus­tain­able growth, he added.

"The ob­jec­tive of that pol­icy has changed to­tally -- it's try­ing to stim­u­late ag­gre­gate de­mand and the hon­est truth is that it's not ca­pa­ble of do­ing that in a sus­tain­able way," White said in an in­ter­view on Tues­day. "If peo­ple thought we were in a pe­riod of delever­ag­ing that would set the scene for a pe­riod of ro­bust growth. We haven't even started yet."

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