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What happens in the hills stays in the hills…

It is credited with preventing the worst global recession since at least the second world war from turning into something far worse. But after the injection of trillions of dollars into financial markets to cushion the blow from Covid-19, the era of quantitative easing could be coming to an end.

This week, attention will turn to the gathering of central bank chiefs in Jackson Hole for clues about how the US Federal Reserve plans to bring its vast QE bond-buying programme to an eventual halt after more than a year of emergency stimulus.

Regarded as “Davos for central bankers” since its inception in the 1970s, the annual meeting in the remote Wyoming resort will have a different flavour this year as the pandemic holds back a return to normal.

The Bank of England governor, Andrew Bailey, will not attend, as would be usual, and there will be no Christine Lagarde, the president of the European Central Bank. Due to Covid disruption, the Federal Reserve Bank of Kansas City, organiser of the bash, is holding a smaller event this year, focusing on a domestic list of speakers.

But investors will still watch the meetings closely to gauge the future of global monetary policy, knowing that if the American central bank changes course, the world economy tends to follow.

Leading central banks now own more than £18tn in government bonds and other assets, an increase of more than 50% on pre-pandemic levels

Early indications came last week after the Fed signalled that it was edging closer to reducing its pandemic-era bond-buying, in a development that rattled global markets. The Fed is buying $120bn (£88bn) a month in US government bonds and mortgage-backed securities to keep longer-term interest rates low and the bond markets functioning smoothly. But most officials now favour cutting back the scale of purchases later this year.

This brings this week’s Jackson Hole speech by the Fed chair, Jerome Powell, into much sharper focus, with inv...

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