The US Federal Reserve officially ended QE3 which virtually print new money out of thin air to purchase financial assets issued by major banks in Oct 2014. After the global financial crisis in 2008/2009, the Fed has been repeatedly trying to boost the US economy (thus employment rate) on a more optimal trajectory through a host of unorthodox measures including QE1, QE2 and the open ended QE3. The jury is still out whether the Fed exited Q3 too prematuredly.After injecting trillion of dollars in the system, inflation in the US hardly budge above 2%.This run counter to contemporary economic wisdom that you will get runaway inflation when the monetary authority pump in excessive amount of money into the economy.
In the same month, BOJ through a tight vote of 5-4 announced sort of a QE in Japan to boost the flagging economy after the consumption tax hike. BOJ will raised the monetary base by US$724b a year. on top of that the Government Pension investment Fund (GPIF) will raise the domestic allocation of stocks from the current 12% to 25%. Allocation for international equities will also go up. The Nikkei 225 reacted with an immediate more than 4% jump on the same day!.Part of the equation I think factor in the BOJ calculation is the unexpected low price of oil which will persist for a while. This give the BOJ some manoeuvre room to engage in greater power to fire up the animal spirits.
personally I see rates remain low in 2015 and even 2016 but I am no prophet. However, I recall that after 2008/1009 at around 2010, you could read numerous articles in NY Times, Economist etc project that rates will go up in 2012/2013 onwards.Retrospectively, all those articles written by "experts" were mostly off the mark.In my untrained view, the GPC dwarf all other financial crisis in modern times (expect the Great Depression of course) and will take a substantially long time to heal.