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CFAs Make 11 Predictions on Long-Term Effects of Pandemic Stimulus

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CFA Institute notes in the introduction to a new paper that governments and central banks in advanced economies have implemented robust and comprehensive plans and have taken a coordinated approach to fiscal and monetary stimulus — a novel and potentially controversial stance on central bank independence. 

The influx of liquidity into the system tamed the risks of pandemic-related market dislocation for sure, and at least partially helped bridge the gap for market participants, workers, regulators, policymakers and investors directly affected by the economic shutdown measures.

Now, concerns are growing about the eventual unintended consequences of this liquidity infusion, including questions about a multispeed recovery, inflationary pressures, addiction to monetary stimulus, taxes, emerging regulatory risks and the actual financial health of corporates. 

The survey results appear to confirm the risk that stimulus measures may be having unintended socioeconomic consequences, Olivier Fines, CFA head of advocacy and policy research EMEA, said in a statement. 

“These consequences need to be considered by monetary authorities along the way toward a full recovery and as we design policies for future crises,” Fines said. “The question of accountability and the targeted impact of measures should be addressed.” 

CFA Institute fielded a survey in March of its global membership to assess their sentiments about the consequences of monetary policy and financial support in response to the pandemic crisis. 

A total of 150,024 individuals received an invitation to participate in the survey. Of those, 6,040 provided a valid answer, for a total response rate of 4%. 

See the gallery for 10 key findings from the survey.