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It will raise inflation.
"Such shocks push up unemployment and raise inflation.
But they also raise inflation, which calls for tightening.
Large budget deficits also directly raise inflation expectations.
If the central bank were to raise inflation expectations that would provide the necessary monetary traction.
That could temporarily raise inflation expectations and lower real interest rates.
But it would also raise inflation, recently down after peaking at a (monthly) 3.4% in April.
That said, QE will not raise inflation in the coming months.
Their goal: to try to raise inflation to reduce the value of the debt.
I'm not aware of a time in which a determined central bank failed to raise inflation expectations.
Finally, aren't policies that are procyclical for Germany, and raise inflation there, the whole point of the exercise?
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com