Emerging markets launch QE, too

EMERGING MARKETS have long resented quantitative easing (QE). When America’s Federal Reserve began its third round of asset purchases in 2012, Guido Mantega, then Brazil’s finance minister, accused it of starting a “currency war”. In 2013 Raghuram Rajan, then the chief economic adviser to India’s government, expressed his displeasure in the manner of Winston Churchill: “Never in the field of economic policy has so much been spent, with so little evidence, by so few.”

In response to the covid-19 pandemic, much is being spent again. But not by so few. The central banks of America, the euro area, Britain and Japan are set to buy $6trn-worth of assets between them this year, according to Fitch, a rating agency, three times what they bought in 2013, the previous peak. And emerging markets are no longer grumbling on the sidelines. Monetary authorities in Chile, Colombia, Costa Rica, Croatia, Hungary, Indonesia, Poland, Romania, South Africa and Turkey have prepared or begun purchases of bonds of various kinds. Still more are contemplating it. Even in Brazil, congress has passed what it calls the “war budget” law, amending the constitution to give the central bank more freedom to buy government bonds and other assets during this crisis.

The scale of emerging-market purchases is small so far in...