Vaccines won’t preclude looser policy

The encouraging news about vaccines has led us to expect most restrictions in advanced economies to be removed by Q2 next year, allowing them to embark on steeper recoveries towards their pre-virus path. But while some have speculated that this will prompt the major central banks to consider policy normalisation, or at least to stop loosening, we disagree. In this Global Central Bank Watch, we outline seven reasons why monetary policy may be loosened further in the coming months and will then remain ultra-loose for several years to come.