(iv)  Quantitative easing will lead to higher inflation in advanced economies  15. Advanced economy central banks have battled the global financial crisis with an unusual show of policy force by resorting to unprecedented levels of “Quantitative Easing”. It is argued that this excess will haunt their economies through higher and persistent inflation once they recover to an equilibrium level. 16.
Will advanced economies have an incentive to battle those inflation pressures? Possibly not. Given their extraordinary fiscal pressures and consequent heavy obligation of public debt servicing, they may in fact find it a convenient way to inflate their way out of debt. 17. The Indian dimension of this global outlook is as follows.