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Since the 2008 global financial crisis, expansionary monetary policy has been the order of the day in most of the major advanced economies. This approach, comprising deep interest rate cuts and large-scale asset purchases (quantitative easing, or QE), has been credited with accelerating the recovery in the United States and the United Kingdom, and pulling the eurozone back from the brink of collapse. As for Japan, which introduced monetary easing in late 2012 as the first “arrow” of Abenomics, Prime Minister Shinzo Abe’s economic reform program, the policy has contributed to the creation of about 2.5 million jobs.

Yet, with low interest rates implying that central banks will have little ammunition to fight the next economic downturn, has reliance on generous monetary conditions to sustain growth gone too far?

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