Quantitative easing and its impacts on the us economy,

LIST OF FIGURES AND TABLES Figure 3.1: Bank of Japan’s QE Figure 3.2: Japanese Inflation Rate Annual Change on Consumer Price Index Figure 3.3: Japan GDP Growth Rate Percent change in Gr

STATE BANK OF VIETNAM BANKING ACADEMY Foreign Language Faculty

- -

GRADUATION THESIS QUANTITATIVE EASING AND ITS IMPACTS

ON THE US ECONOMY

Lecturer : Pham Thi Hoang Anh (Ph.D) Student : Le ThiThanhHoa

Class : K14-ATCB Student Code : 14A7510074

20th May 2015

ACKNOWLEGEMENTS

First and foremost, I would like to express my heartfelt thanks toMrs Pham ThiHoang Anh, Ph.D for her enthusiastic guidance and precious advice I could hardly complete my graduation thesis on “Quantitative Easing and its impacts on the

US economy” without her closely and dedicated supervision Secondly, I would like

to show my appreciation to all the lecturers in Banking Academy, especially lecturers

in Foreign Language Department, who provided me with useful background knowledge during the last four years Last but not least, I am grateful to my beloved parents for their blessings, my classmates for their help in finding data and statistics

as well as their best wishes for the success of my graduation thesis

Although I have made great effort to complete this thesis, it would certainly not be free from defect because of the time constraints and limited capacity of mine I hope that lectures and readers could sympathize and contribute to complete the thesis

Sincerely

Hanoi, June 2015

STATEMENT OF ORIGINALITY

I hereby would like to declare in lieu of oath that this thesis submission with the title

‘Quantitative Easing and its impacts on the US economy’ is my own work and to the

best of my knowledge without any inadmissible help and without the use of any sources other than those listed in the list of reference Any contribution made to the research by other people is explicitly acknowledged in this thesis

I would like to further declare that all that the intellectual content of this thesis is the product of my own work, except to the extent that assistance from others in the project’s design and conception or in style, presentation and linguistic expression is

acknowledged

Le ThiThanhHoa

ABSTRACT

After the Great Depression of the 1930s, the American economy experienced robust growth, with periodic lesser recessions, for the rest of the 20th century However, in

threatened the total collapse of large financial institutions once again opened a long dark period for the US economy

The bursting of the US housing bubble, which reached its peak in 2006, was considered o be the root cause of the Great Recession US housing bubble resulted in the plummet of securities tied to US real estate pricing, damaging the global financial system The financial crisis was triggered by a complex interplay of policies that providing easier access to loans for borrowers with the purpose of encouraging home ownership, over-valuating the bundled subprime mortgages mainly based on the theory that housing prices would continue to escalate

Due to the financial crisis, global economic growth saw significant slowdowns The U.S Federal Reserve and central banks around the world took steps to mitigate and avoid the risks of a deflation spiral, in which lower wages and higher unemployment led to self-reinforcing decline in global consumption In US, a series of instruments was implemented by Fed; however, the leading economy was still obsessed with the bleakeconomic outlook In late 2008, Fed decided to carry out QE as the final measure with the aim of creating strong motivation for the economy to recover

This thesis would deeply analyze QE and how it was implemented to rescue the US economy trapped in the recession Whether or not it left behind any risks for the US economy would also be included in this thesis

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LIST OF FIGURES AND TABLES

Figure 3.1: Bank of Japan’s QE

Figure 3.2: Japanese Inflation Rate (Annual Change on Consumer Price Index)

Figure 3.3: Japan GDP Growth Rate (Percent change in Gross Domestic Product)

Figure 4.1: US house price changes

Figure 4.2: US subprime lending expanded significantly 2004-2006

Figure 4.3: USD/EUR in 2008

Figure 4.4: US Treasury Yield and QE1

Figure 4.5: US inflation rate

Figure 4.6: 30-year fixed rate mortgage

Figure 4.7: S&P 500 and QE1

Figure 4.8:Real Quarterly US GDP Growth Rate

Figure 4.9: S&P 500 and QE1 and QE2

Figure 4.10: US inflation rate

Figure 4.11: Real Quarterly US GDP Growth Rate

Figure 4.12: US Treasury yield and QE2

Figure 4.13:US Treasury Yield and Operation Twist

Figure 4.14:Operation Twist and the yield curves

Figure 4.15:S&P 500 and Operation Twist

Figure 4.16:Quarter-to-Quarter Growth in US Real GDP

Figure 4.17: S&P 500 and QE3

Figure 4.18: QE3 and US Growth Rate

Figure 4.19: Impacts of QE3 (left) and QE3 tapper (right) on 30-year fixed-rate mortgage

Figure 4.20: Long-term Yield and USD/EUR Exchange rate responses in QE3

Figure 4.21: US Inflation Rate during the performance of QE3

LIST OFABBREVIATION

US United States MBS Mortgage-backed securities

QE Quantitative Easing FED Federal Reserve BOJ Bank of Japan JGB Japanese Government Bonds GDP Gross Domestic Product CDO Collateralized debt obligations GSEs Government sponsored enterprises USD United States Dollar

FOMC Federal Open Market Committee S&P 500 Standard & Poor’s 500 Stock Index JGB Japanese Government Bond

CPI Consumer Price Index GDP Gross Domestic Product

CHAPTER 1: INTRODUCTION 1.1 Background

The global financial crisis of 2007 has cast its long shadow on the economic fortunes

of many countries, resulting in what has often been called the ‘Great Recession’ It is believed that the global financial crisis resulted from US subprime mortgage and credit crisis Overall, 2009 was the first year since World War II that the world was

in recession, a calamitous turn around on the boom years of 2002-2007

It is undeniable that US experienced such a difficult period lasted over 4 years from late 2007 to early 2012, which left behind severe sequences for the US economy and global one as well With the aim of recovering the global economy, governments of developed countries decided to lower the interest rate, credit easing and simultaneously increase the money supply to the economy For US, after 8 times FED lowering the interest rate, it was justified from 5% to 0.25% In this case, US interbank interest rate had tendency to approach zero; consequently, this policy no longer effective to be implemented

In December 2008, the FED pushed its policy rate to zero, but inflation was still too low and the economic recovery was weak Obviously, standard monetary policy turned out not to be effective any more At that time, QE become the last solution for

US economy to survive in the dark period of recession

Analyzing QE and how it really worked to help US recover from recession would be the main content of this thesis

1.2 Research Objectives

The thesis deeply focuses on investigating the US QE policy with the aim of finding out to what extent it can help US to recover from the Great Recession

1.3 Methodology

In this thesis, with the purpose of making it more reliable, I use a wide range of methods Literature survey with secondary data has been used in order to provide precise information Besides, the thesis also includes data collecting and sampling method as well as data analysis method

1.4 Data source

The analysis is mainly bases on reliable information collected from various sources, namely Federal Reports, IMF Reports, New York Times, other reputable publishers and database of reliable market data providers such as university researches

1.5 Research question

The thesis aspires to reveal the answer for the following questions:

What is QE?

How is QE implemented in US?

What are the impacts of QE on the US economy?

1.6 Scope and Limitations

The thesis concentrates on studying the economy background of US and the impacts

of QE to the US economy in the gap from late 2007 to nearly the end of 2014

III) Theoretical framework

IV) Analysis and Results

V) Conclusion

CHAPTER 2: LITERATURE REVIEW

The very first evidence of QE cited in literature is the money response of US when FED carried out to purchase $1 billion Government Treasury in 1932 and continued

to 1936 Before the boom of financial crisis in 2007 in US, this issue received little concerns and it was infrequently researched as a consequence Therefore, unlike conventional monetary literature, that of QE is rather rare and difficult to gather

Existing literature at that time mainly focus on the QE implementation of Japan in 2000s Shirakawa (2002) argues that the act of approaching to QE of Japan during

2000 is essentially similar to that in the early 1930s of US As Japanese official bank rate effectively reached zero in February 1999, the Bank of Japan initiates QE as a supplement to zero-rate policy in March 2001 to provide further stimulus to the economy and to avoid deflationary trend According to a study conducted by Schenkelberg and Watzka (2011), other than creating inflation, the implementation

of QE in Japan led to short run increases in industrial activity They also added that the QE in Japan was on a “small” scale compared to Japanese GDP Indeed, this monetary policy program was only 6% of Japan’s GDP, and it took about five years

to complete

Thereafter, in 2007, US fell into recession and when the interbank interest rate reached zero, QE once again showed it effectiveness With purpose of supporting the implementation of QE in US, Bernanke (2004) studies Japanese QE to draw a lesson for US He also gives a theoretical framework about how QE could help monetary authority to interfere money supply under a zero-bound interest regime, in which two method are suggested He states in his study that the first way is managing central bank’s balance sheet components by reorganizing the types of assets The other way

is to restate central bank’s commitment to keep the interest rate low for a predetermined period Two recent studies investigating the impacts of QE announcements on financial markets are Gagnon, Raskin, Remache, and Sack(2011), and Krishnamurthy and Vissing-Jorgensen (2011).The former study looks

at 23 QE announcements The first is on 25 November 2008 and the twenty third is

on 17 February 2010 Of these 23 announcements, eight are considered baseline which included new information about the potential or actual expansion of the size, composition, and timing of the large-scale asset purchases The later, on the other hand, looks at five of these eight baseline announcements Both these two studies aim

at giving out conclusionabout the effectiveness of QE carried out by FED as well as evaluating whether or not the movements of FED in response to the market was timely enough

CHAPTER 3: THEORETICAL FRAMEWORK

3.1 An overview of Quantitative Easing

3.1.1 Definition of Quantitative Easing

QE is an unconventional monetary policy used by central banks with the aim of stimulating the economy in case standard money policy has become ineffective Central banks implement QE by purchasing financial assets from commercial banks and other private institutions, thus raising the price of those financial assets and lowering their yield, while simultaneously increasing the monetary base for the economy Only when the interbank interest rate have tendency to approach zero may

QE be considered

QE differs the way it stimulate the economy from standard monetary policy Indeed, FED auctions off large quantities of Treasury to pay for expansionary fiscal policy, which causes high demand for Treasury and low Treasury yields consequently It would also keep auto, furniture and other consumer debt rates affordable for public

as Treasuries are the basis for long-term interest rates Similarly, the corporate bond will have tendency to lose the yield if FED purchases it in the market, which would enable businesses to expand more cheaply and easily However, the most important target of QE is maintaining low long-term, fixed-interest and mortgage rates with the aim of supporting the housing market

Overall, the target of QE is to increase commercial bank liquidity Central Bank purchases bonds with commercial banks in order to pump money to their cash reserves and encourage them to lend to businesses Furthermore, through buying government bonds, central bank helps push the price to go up, leading to the reduction

in long term interest rate which could stimulate greater economic activities in the economy

3.1.2 General impacts of Quantitative Easing on the economy

In reality, QE is an occasionally used monetary policy and it is considered the last solution for rescuing an economy which is sinking deeply in recession QE refers to large-scale asset purchases conducted by a central bank in order to put downward pressure on market interest rates In theory, QE might either benefit the economy or negatively impact it in some particular cases In order to achieve predetermined target, sometimes the central banks have to trade-off between benefits and risks However, central banks would find its own way to minimize unexpected risks for the economy

3.1.2.1 Effectiveness of Quantitative Easing

Theoretically, QE works through two channels The first is the portfolio rebalance channel, whereby the central bank changes the relative supply of assets available to investors As investors replace government bonds they sell to the FED with other, riskier assets, the prices of those assets; for instance, stocks or houses, tend to rise, helping to stimulate businesses and consumers spending This would result in the higher rate of GDP growth, inflation, which could help the economy wake up from recession Moreover, the recovery of businesses could reduce unemployment rate, which is a good signal for the economy

The other way QE helps to lower market interest rates is by signaling that the central bank plans to keep policy rates low for a long time Eventually, rising asset prices and falling mortgage rates helped to stimulate the broader economy through the same channels as conventional monetary policy QE also contributes to the weakening of the currency Indeed, as the central banks pump money into the economy, the increase

in the money supply would depreciate a country exchange rates compared to other currencies The devaluation of a currency would encourage other countries to purchase larger quantities of goods with this country, which would benefit both the exporters and the domestic economy

In conclusion, the main target of QE is to create motivation for the economic growth, helping the whole economy to escape from recession, opening a brighter outlook for the country which carries out this measure

3.1.2.2 Risks of Quantitative Easing

While being economic recovery motivation, QE could also leave some risks behind for the economy Firstly, it can cause higher inflation than desired if the amount of easing required is overestimated and too much money is created when purchasing liquid assets

However, inflationary risks are mitigated if the system’s economy outgrows the pace

of the increase of the money supply from QE If production in an economy increases because of the increased money supply, the value of a unit of currency may also increase, even though there is more currency available Secondly, QE could fail to spur demand if banks remain reluctant to lend money to businesses and households, which could cause capital stagnancy and economic downturns Thirdly, Increasing the money supply tends to depreciate a country’s exchange rates relative to other currencies, through the mechanism of the interest rate Lower interest rates lead to a capital outflow from a country, thereby reducing foreign demand for a country’s money, leading to a weaker currency Lower interest rates could do harm to the creditors as they earn less money The importers, at the same time, could be adversely impacted as the cost of imported goods is inflated by the devaluation of the currency

3.2 Precedents

Although the act of FED implementing QE to fight Great Recession in late 2008 was repeatedly called ‘unprecedented’ by lots of pundits and new sources, some economists still argued that QE had been used in 1930s and 1940s when US faced Great Depression

Before US, Japan had instituted a policy termed ‘Quantitative Easing’ with the purpose of fighting domestic deflation in the early 2000s QE was effectively born in Japan which was plagued in recent history by deflation and rolling recession QE was first used in Japan in 2001 and lasted five years with the target of stimulating economic growth and forcing prices to rise again

After having proceeded with several open-market operations, which aimed at lowering the overnight interest rates down to the near-zero level (as targeted by the Japanese Overnight Call Rate), Japan’s monetary operations started to focus on the outstanding balance of current accounts of commercial banks Specifically, under QE, the BOJ flooded commercial banks with excess liquidity to promote private lending, leaving them with large stocks of excess reserves and therefore much less risk of a liquidity shortage The BOJ accomplished this by buying more JGB than would be required to set the interest rate close to zero It later also bought asset-backed securities and equities as well as extended the terms of its commercial paper purchasing operation The BOJ increased the commercial bank current account balance from ¥5 trillion to ¥35 trillion (approximately US$300 billion) over a four-year period starting in March 2001 The BOJ also tripled the quantity of long-term JGB it could purchase on a monthly basis

The injection of liquidity into the banking system, together with the lowering of the risk of a liquidity shortage and the already low interest rates, created a solid base from which Japan’s recovery could take place Additionally, Japanese QE also aimed

at stimulating new long-term investments with a large plan of long-term JGB purchases which would cause a reduction in JGB yields and in long-term interest rates consequently

The effectiveness of Japan’s QE program took longer than expected to show its results, due to the sick economy in which the policies had been made and the frail status of the banking sector Therefore, despite the larger amount of liquidity

available, Japaneseeconomy had to wait for more stable economic conditions before taking advantage of the monetary easing coming from the BOJ

Figure 3.1: The Bank of Japan’s QE

Source: Bank of Japan

It could be concluded from the graph that although BOJ made great effort to pump money into the banking system to encourage banks to lend to borrowers, the total amount of money lending out even tended to decrease steadily More detailed, the base money, except for a fall of 50 in the first half of 2006, witnessed an upward trend with the amount of base money stood at 150 in the end of 2006 On the contrary, bank loans declined continuously from about 90 to just under 80 in 2006 Eventually, BOJ failed to force banks to lend out as its expectation, which could do harm to the economy

Figure 3.2: Japanese Inflation Rate Annual Change on Consumer Price Index

Source: Ministry of Internal Affair & Communications

Overall, the inflation rate of Japan was instable and obsessed a lot of fluctuations during the implementation of QE At the beginning of the period, the inflation rate stood at about -0.25%, then went downwards and bottomed out at just over -1.5% Thanks to QE, the inflation rate had motivations to rise again However, except for two peaks at late 2004 and late 2006 when the interest rate reached nearly 1%, this figure still witnessed negative growth rate Additionally, at the end of 2007 when Japan put an end to QE, this country could hardly escape from the dark shadow of recession since the inflation rate, though standing at the higher level compared to the initial one, still equal to zero This result, to some extent, could reflect the ineffectiveness of QE to Japanese economic

Figure 3.3: Japan GDP Growth Rate Percent change in Gross Domestic Product

Source: The Cabinet Office

A glance at the graph above reveals some information about Japan’s economic growth during the period that BOJ conducted QE It could be easily seen that Japanese growth rate fluctuated around 0% Although sometimes the growth rate climbed up to 1% as

in late 2002, 2003 and 2005, this figure fell right after Therefore, the graph strongly proved that QE did not create any motivation for the economic growth

economy still witnessed stagnancy, which was stemmed from the act of keeping money for reserves of banks Japan could not find its way to escape from difficulty

and continued to sink more deeply in the recession

CHAPTER 4: ANALYSIS AND RESULTS

4.1 Background of US economy in 2008

The financial crisis booming in 2008, which was considered to have been the worst financial crisis since the Great Depression, left behind great damages for global economy, especially for the US economy

The immediate cause or trigger of the crisis was the bursting of the United States housing bubble which peaked in approximately 2005–2006 The act of giving out more loans to potential home owners of financial institutions in US led to the escalation of house price

Figure 4.1: US house price changes

Source:www.icis.com

The graph illustrates the US house price changes in the gap of 1987 and 2011 As it can be seen from the graph, in 1987, house price stood at just over 60,000 USD and gradually increased to 80,000USD in 1990 This figure remained stable for the gap

of the next eight years before gradually rose and reached its peak at about 225,000 USD in 2006, which formed housing bubble The house price, however, didn’t continue to climb up as banks’ expectations Instead, it continuously went down in the next 3 years, which was called the bursting of housing bubble

After the bursting of housing bubble, borrowers found it hard to repay money to financial institutions, which pushed these financial institutions into troubles Additionally, the plummet of house price also resulted in the devaluation of CDO and MBS issued by lending institutions, leading to the credit crunch

Another factor that caused the financial crisis in US was the subprime mortgage crisis

In the competition among mortgage lenders for revenue and market share accompanied with the limited supply of credit worthy borrowers, mortgage lenders applied easier underwriting standards as well as originated riskier mortgage to less creditworthy borrowers According to some analysts, GSEs maintained relatively high underwriting standards prior to 2003 However, with the aim of competing with private banks, GSEs had to justify mortgage standards to decline and gave out risky loans Indeed, these financial entities provided easier credit access to borrowers and overestimated borrowers’ mortgage for loans, which was called as subprime mortgage

Figure 4.2: US subprime lending expanded significantly 2004-2006

Source: US Census Bureau, Harvard University State of the Nation Housing Report 2008

originationsaccompanied with the home ownership rate in terms of percentage In the gap of 2004 and 2006, GSEs maintained subprime mortgage share below 10% of all mortgage originations until 2004, when they justified it to spike to nearly 20% This figure gradually rose through the 2005-2006 peak of US housing bubble, causing risks for US banking system

The bursting of housing bubble resulted in the financial difficulties for US banking system as borrowers could not have abilities to pay money back Banks also found it difficult to put mortgage on sale as the real value of mortgage could not cover the loans of borrowers

Additionally, a series of factors caused the financial system to both expand and become increasingly fragile, a process called ‘financialization’ From 1970s, US government focused on encouraging financial sector to develop by deregulation,

which led to less oversight of operations and less information about new activities performed by banks and other financial institutions This resulted in what known as the shadow of banking system as policy makers could not realize the importance of financial institutions such as investment banks and hedge funds Although it was believed that the role that these financial institutions played had become as big as commercial banks, they were not put under the same regulation, which could not guarantee the safety of US banking system

Due to the financial crisis, the US economy witnessed a series of recession signals during the first nine months of 2008 There were 84,000 unemployed each month, accompanied with the bankruptcy of a series of long-lived financial institutions pushed the US economy into financial crisis, which led to the decline of household consumption and the production downscaling of many corporations throughout US

as well The most noticeable bankruptcy case in this period was that of Lemah Brothers, the largest bankruptcy filling in US history, holding over $600 billion in assets

Figure 4.3: USD/EUR in 2008

Source:www.x-rate.com

The financial crisis also made the USD rose as investors bought USD in order to enhance liquidity In the first half of 2008, USD/EUR exchange rate experienced an upward trend from 1.470754 in January to 1.576421 in July The increase in price of USD impacted negatively on US exporters since higher price could result in smaller volume of goods exported to other countries However, at the same time, the appreciation of USD could benefit importers because they would have to pay less money for the same amount of goods imported in US

Despite a lot of great effort to rescue the economy from recession, US still experienced economic slump With the purpose of promoting US economy recovery and avoiding US from sinking deeply in recession, FED decided to implement QE to kick start economic growth Previously, FED had lowered interest rate 8 times which made the interest rate closer to zero At that time, standard monetary policy could not

be effective any more Instead, QE was adopted, in which FED bought long term assets such as government bonds or commercial banks’ securities in order to directly pump money into the economy through banking system The increase in amount of money in the economy would create motivation for financial institutions to lend out more money to businesses and individuals, thus stimulating them to invest and spend more, kicking economic growth

4.2 Timeline of Quantitative Easing in US and its impacts on the US economy

4.2.1 QE1 and its impacts on US economy

4.2.1.1 Timeline of QE1

QE1 is the initial round of QE, in which FED purchased debt such as MBS, federal agency debt, treasury bonds and notes up to $1.75 trillionfrom its member banks through Trading Desk at New York Federal Reserve Bank QE1 lasted from December 2008 to March 2010

The program was first announced on November 25, 2008 FED began buying $600 billion in MBS, and $100 billion in other debt, all of which were backed by GSEs

such as Fannie Mae, Freddie Mac, Ginnie Mae and the Federal Home Loan Banks The purpose was to support the housing market, which was devastated by the subprime mortgage crisis

On December 16, FOMC was evaluating the potential benefits of purchasing longer term Treasury securities It still targeted to provide support to the mortgage and housing markets and stood ready to expand its purchase of agency debt and MBS

Later, on March 18, 2009, FED officially decided to increase its balance sheet by purchasing an additional $750 billion of agency MBS, bringing its total purchases of these securities up to $1.25 trillion Besides, FED also intended to buy up to $300 billion of long term Treasury securities

However, it was announced on November 4, 2009 that FED would purchase a total

of about 175 billion of agency debt, which was less than what was previously announced FOMC decided to gradually slow down the pace of its purchases in order

to create smoother transition in markets

QE1 was completed at the end of the first quarter of 2010 Nevertheless, it took some time for the securities to settle on the balance sheet Therefore, there were additional transactions made from April to August 2010

4.2.1.2 Impacts of QE1 on the US economy

Although QE1 aimed at purchasing agency debt to provide liquidity for financial institutions, FED did not pump money directly into the economy to perform credit expansion or manufacture and consumption stimulation Instead, this amount of money was put in financial institutions’ reserves at Federal Reserve QE1 was highly appreciated and was considered a timely measure to ease the difficulties In anotherwords, QE helped to slow down the pace of recession and paved the way for

a new era of rapid growth

It was said that QE1 could not come up to Fed’s expectations

Figure 4.4: US Treasury Yield and QE1

Source: www.thechartstore.com

Despite large purchases of long term Treasury securities, QE1 could not lower the interest rate of it In details, Treasury yield experienced an upward trend overall after many fluctuations during the implementation of QE At the beginning of QE1, the long-term interest rate stood at 2.5% before hitting a bottom of 2.08% some days later When QE1 came to an end, this figure climbed up to 4.01%, which was nearly doubled that in the beginning However, it was noticeable that after the end of QE1, the long term interest rate had tendency to fall in response to QE1, which was a good signal

Additionally, economic analysts claimed that banks were not lending as much money

as Fed had hoped but hoarding cash instead in order to cover the rest of subprime mortgage debt still existing on their balance sheets Others, meanwhile, were keeping money so as to increase their capital ratio Banks raised their lending standards to avoid risks as in the previous time; therefore, there were almost no credit worthy borrowers for banks to make loans The act of tightening credit conditions of banks could protect banking system from collapsing However, it could simultaneously lead

to capital shortage of many corporations which needed money for their operation After all, Fed could do nothing to force banks to lend except for giving them incentives to do so At the same time, another problem emerged was that Fed now had a record high level of potential bad assets on its balance sheet while its ability to create cash to cover bad debt is limited

Despite some drawbacks, QE1 did work Although the act of creating cash with large volume could result in the depreciation of USD, it could simultaneously create inflation which counteracted deflation in housing At that time, the value assets on Fed’s balance sheet would be raised, which would be a positive signal for the economy

Figure 4.5: US inflation rate

Source: Bureau of Labor Statistics

The graph demonstrates the annual changes of US inflation rate At the beginning of QE1, inflation rate stood at a record low level of about 0.2% Except for a slight rise

in March, 2009, this figure continued to decline before hitting a trough of -2%