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Covid-19 stimulus tames EM bond yields

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MUMBAI : Quantitative easing (QE) measures, or long-term asset purchases, were heavily used by central banks as a stimulus measure after the financial crisis of 2008.

Covid-19 has prompted central banks to take similar decisions again. But a new study points out that the reaction of bond markets to such steps has been starkly different in developed and emerging economies.The analysis, a working paper by the US National Bureau of Economic Research, finds that QE announcements brought down yields of benchmark government securities much more in emerging markets than developed ones.

Even in developed markets, the impact was slightly lower than what was seen during the previous recession.The study analyses 24 QE announcements made by 21 central.

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