The only economic effect of European quantitative easing (QE) thus far has to be depreciating the euro, says AXA Investment Managers.
AXA Framlington head of Asia Mark Tinker said European QE is vastly different from both US and Japanese QE, and will therefore have a different economic impact.
"What they're doing is providing liquidity to the banking system.
"[But] until the banks turn that liquidity into credit, it doesn't generate any economic activity.
"The only thing you really see is that when they create all this liquidity, it causes the currency to weaken," Mr Tinker said.
Mr Tinker said that the European Central Bank is buying long-dated bonds that institutions are not recycling back into the economy.
“The central banks are putting liquidity into the system which does not create economic activity unless it is recycled as credit.
“The regulators are stopping them creating credit and everyone’s wondering why it doesn’t work.
"QE in Europe is not having any economic impact, as far as I can see, beyond the currency,” Mr Tinker said.
He warned investors not to buy into the idea that QE promotes growth and pointed out that QE is part of an unconventional global policy trend.
AXA Investment Managers global head of institutional client strategy, Tim Gardener, said markets are in a “period of unpredictable change".
"We can't talk about normal at the minute, I think we can only talk about abnormal," said Mr Gardener.
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