Africa faces global quantitative tightening
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Central banks in the developed world are contemplating an end to their dalliances with quantitative easing. Crucially, the US Federal Reserve announced its intention to commence balance sheet normalisation by ceasing to reinvest maturing principal of its bloated holdings of US Treasury securities and mortgage backed securities. Currently, the Fed’s balance sheet is 25% of US GDP. Normalisation will, therefore, require many years, but there will be important implications for the international cost of capital.