QE Unwinding

The impending unwinding of QE has been the headline grabber of late. The fear of such an event has already sent stock markets tumbling. Home loan mortgagees are warned to look out for rising interest rates. It’s anyone’s guess where property prices are headed though. On the one hand, the unwinding of QE could lead to deflation as rising interest rates bring about a fall (crash) in bond prices, which subsequently also causes everything else to fall, potentially including property prices. On the other hand, money may flow from bonds and equities to “hard assets”, including properties, thus providing a support.

It’s interesting to note that, after all the supposedly massive intervention central banks have introduced to the economy, we seem to manage. I suspect that as long as one is not too greedy, one will get through the coming uncertainty fine.

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