Financial repression to keep a lid on bond yields

Financial repression is not a costless way to deal with public sector debt burdens, but it tends to be more politically palatable than the other options. Indeed, it is already happening and governments will increasingly turn to it. Financial repression will continue to consist mainly of mild intervention rather than extensive interference. While this means that any adverse effects on GDP growth and inflation will be limited, its fiscal benefits are therefore unlikely to be big enough to obviate the need for some austerity.