Central banks spending $834 mn an hour for 18 months to save global economy

Central banks around the globe have spent $834 million an hour for the last 18 months to keep businesses viable amid the COVID-19 led lockdowns. It’s an amount that represents the wall of money that helped companies stay afloat during lockdowns and led to the biggest stock market rally of a generation.

Central banks have been buying bonds since the pandemic hit, which fuelled the greatest stock market surge in a generation, said a Bloomberg report quoting strategists at the Bank of America.

Strategists wrote that “Stimulus has caused immense inflation of Wall Street assets.” The US' Federal Reserve System alone has put in $4 trillion, the report added.

With central banks absorbing so much of the bond market to force down the borrowing costs, currently, there is more than $16 trillion in debt with a negative yield.

This also plays a large part in why people are now more attracted to buying stocks. However, the big question for investors is how much longer can central banks keep the cash spigots flowing at full force.

In New Zealand, the central bank refrained from raising interest rates after the country entered a three-day lockdown. But the Bank of America pointed out that “Investors have zero fear of central banks.”

The report also suggests that the delta variant could be the wild card.

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