Oluyomi Ola-David Insights

Quantitative easing, QE, is a monetary policy means to an end – stimulating growth in the economy. It is an extraordinary tool employed by central banks to boost an economy when tempering interest rates yield little or no desirable results. In order to maintain satisfactory economic growth rates, a central bank may decide to raise or lower interest rates. Lowering interest rates tends to lower savings and encourage consumption spending and investment spending. In the event that a lowered or close-to-zero interest rate does not rouse aggregate demand as expected, a central bank may decide to ‘pump’ money directly into the financial system; this is what QE is about. Ordinarily, a central bank may adjust interest rates to put a check on inflation. For instance, when corporates scale back on investment due to uncertainties about the future, a central bank can reduce its lending rates. A reduction in the rate at which banks and other financial institutions may lend from the centr

Recession is costly and it happens in all countries and at various points in the global growth trajectory. A recession simply indicates a slowdown in economic activity in a domestic economy or an average slowdown in global economic activity if it is on the global scale. Broadly, a recession is characterized by a contraction in domestic output and all components of the aggregate demand function – consumption, investment, government spending and net export activity. The observable decline in real income, real GDP, industrial production, employment, sales activities across an economy could last more than a few months . It usually begins with a contraction after a peak and ends after an economy reaches a through. When severe and prolonged, recession results in a depression. An economic slowdown characterized by a recession can be triggered by a variety of phenomena. Based on observable cross-country economic experiences over time, there are several indications that a domestic rec