2012 was a disappointing year for the global economy. The UK and
the Euro Area fell back into recession and global activity was
unexpectedly weak.
Policymakers responded to the slowdown with a wave of measures
in an attempt to bolster growth. The US and UK undertook further
rounds of Quantitative Easing and Japan and China loosened monetary
policy. The euro area authorities pumped money into the
region's banks and announced they stood ready to buy, without
limit, the bonds of at risk governments. And in a historic change
the US Federal Reserve announced last month that it will keep
interest rates at close to zero until unemployment falls below
6.5%.
In recent weeks the temporary fix to America's debt crisis,
a huge programme of public spending by the incoming Japanese
government and an easing of the Basel III rules for bank capital
have added to the more positive mood.
