The QE tapering that never happened from a few months back sits in the back of our minds still as we sit here and wonder when will it happen, for now as the way things look, 2014 looks likely to be another year of continued easing and low rates world wide and Richard Koo here has put out a few good arguments stating that this may be the case for the next few years. Regardless its still something we have to be aware of.
Demand then falls in interest rate sensitive sectors such as automobiles and housing, causing the economy to slow and forcing the central bank to relax its policy stance. The economy heads towards recovery again, but as market participants refocus on the possibility of the central bank absorbing excess reserves, long-term rates surge in a repetitive cycle I have dubbed the QE “trap.”
Source: Business Insider