Why has the US Federal Reserve’s policy of quantitative easing been so much more successful than the version of QE implemented by the European Central Bank? That intellectual question leads directly to a practical one: Will the ECB ever be able to translate quantitative easing into stronger economic growth and higher inflation? The Fed introduced quantitative easing – buying large quantities of long-term bonds and promising to keep short-term interest rates low for a prolonged period – after it concluded that the US economy was not responding adequately to traditional monetary policy and to the fiscal stimulus package enacted in 2009. The ...
