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Illustration: Aïda Amer/Axios

Central banks already have started priming their collective money printers and in the coming months are poised to crank them up to 11, buying up more bonds and delivering more liquidity to markets.

Why it matters: The recent rally in equities now has more backing from central banks.

  • This could be especially beneficial in the U.S. where companies have thrived on low rates and easy money while trimming their bottom lines through layoffs.
  • And while the possibility of lockdown measures returning could again wreak havoc on real and local economies around the globe, as COVID-19 cases increase and hospital beds fill up, stocks could race to new highs.

What's happening: On Thursday, the Bank of England said it would buy an additional $197 billion of U.K. government debt, following the Reserve Bank of Australia's announcement that it would engage in QE for the first time, buying $73 billion in government bonds.

Back home: Fed chair Jerome Powell made clear at November's FOMC press conference last week that the Fed is prepared to join the party.

  • "We’re strongly committed to using these powerful tools that we have to support the economy during this difficult time for as long as needed and no one should have any doubt about that,” Powell said.

By the numbers: As of October, the Fed, ECB, Bank of Japan and People's Bank of China held $26.8 trillion on their collective balance sheets, having increased their bond-buying programs by 38.5% over last year, per Yardeni Research.

  • The Fed, ECB and BOJ have increased their collective programs by 50%.

Between the lines: September marked the 20th straight month of interest rate cuts for central banks in developing countries.

  • At least 18 emerging market central banks have set up and carried out asset-purchase programs of some kind, according to the IMF, with many delivering outright quantitative easing. (The only real difference being that some central banks are buying their country's government bonds even before cutting interest rates to 0%.)

Yes, but: Some argue, monetary policy is reaching the limits of its effectiveness.

  • "Markets aren’t facing liquidity issues," WSJ's Jon Sindreu writes. "When a car isn’t short on fuel, adding more gas to the tank doesn’t make it run faster."
  • "Buying more bonds is mostly meaningless because it doesn’t tell the market anything it doesn’t know."

Go deeper

Dion Rabouin, author of Markets
Jan 28, 2021 - Economy & Business

How GameStop exposed the market

Illustration: Eniola Odetunde/Axios

Retail traders have found a cheat code for the stock market, and barring some major action from regulatory authorities or a massive turn in their favored companies, they're going to keep using it to score "tendies" and turn Wall Street on its head.

What's happening: The share prices of companies like GameStop are rocketing higher, based largely on the social media organizing of a 3-million strong group of Redditors who are eagerly piling into companies that big hedge funds are short selling, or betting will fall in price.

Updated 3 hours ago - Politics & Policy

Senate action on stimulus bill continues as Dems reach deal on jobless aid

Photo: Alex Wong/Getty Images

Democratic leaders struck an agreement with Sen. Joe Manchin (D-W.V.) on emergency unemployment insurance late Friday, clearing the way for Senate action on President Biden's $1.9 trillion stimulus package to resume after an hours-long delay.

The state of play: The Senate will now work through votes on a series of amendments that are expected to last overnight into early Saturday morning.

Capitol review panel recommends more police, mobile fencing

Photo: Olivier Douliery/AFP via Getty Images

A panel appointed by Congress to review security measures at the Capitol is recommending several changes, including mobile fencing and a bigger Capitol police force, to safeguard the area after a riotous mob breached the building on Jan. 6.

Why it matters: Law enforcement officials have warned there could be new plots to attack the area and target lawmakers, including during a speech President Biden is expected to give to a joint session of Congress.