The IMF also sounded a warning against the unintended effects of the trillions deployed by policymakers to ease the impact of the virus creating exuberance in financial markets – and gave a veiled hint that central banks should be ready to pull the plug.
It added: “Policymakers need to be attentive to possible unintended consequences, such as a continued buildup of financial vulnerabilities in an environment of easy financial conditions. The expectation of continued support from central banks could turn already stretched asset valuations into vulnerabilities.”
The Bank of England has encouraged lending by banks, cutting the counter cyclical capital
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