Central Banks Face a New Balancing Act

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Central bankers around the world are mulling the future of their massive bond-buying programs in a post-pandemic world, knowing that with big balance sheets come big expectations.

The Group of Seven developed economies piled on about $7 trillion in debt last year as they spent heavily to fight the pandemic and prop up their economies. Central banks ended up owning much of that new debt, according to Bloomberg Economics.

Featured in the June/July issue of Bloomberg Markets.

Illustrator: Rachell Sumpter

Even as asset purchases continue, with hundreds of billions of dollars spent each month, officials at the U.S. Federal Reserve and the European Central Bank are among those figuring out how—or if—they can reduce asset piles that have been a mainstay of financial markets for more than a decade.

The problem is that markets have come to expect central banks to use their buying power to smooth over any hint of trouble….

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