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The stock market is underpricing risks

Tong Kooi Ong
Tong Kooi Ong7/26/2019 11:19 AM GMT+08  • 6 min read
The stock market is underpricing risks
(July 29): In the aftermath of the global financial crisis (GFC), central banks around the world embraced aggressive monetary policies to minimise the fallout and kick-start the recovery process. That includes cutting policy rates to historic lows, even i
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(July 29): In the aftermath of the global financial crisis (GFC), central banks around the world embraced aggressive monetary policies to minimise the fallout and kick-start the recovery process. That includes cutting policy rates to historic lows, even into negative territory, as well as launching massive quantitative easing programmes.

A decade later, the world’s biggest central bankers are, once again, poised for a fresh round of monetary easing as global economic growth loses momentum.

By putting a cost on deposits, policymakers hope to push banks-investors further out on the risk spectrum and boost credit expansion. Substantially reducing the cost of borrowings would also encourage businesses to invest and expand.

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