Expectations for further quantitative easing at upcoming European Central Bank and Bank of Japan meetings may be running high, but chances are central bankers will be wasting their time with fresh measures, analysts warned.
Brian Coulton, chief economist at Fitch Ratings, said the gap was narrowing between the marginal benefits of central banks further expanding their balance sheets by buying more assets and the unintended negative consequences.
"Quantitative easing has some downside effects for the profitability of banks," Coulton said on Tuesday at Fitch's Global Sovereign Conference in Singapore. "It may not spur bank lending as strongly as you would expect."
Additionally, quantitative easing was distorting markets, he said, noting that the BOJ already owned 35 percent of the Japanese government bond market, making the price discovery process ineffective.
Some analysts expected the ECB to increase its bond-buying program at its meeting on Thursday; the current program called for purchasing a total of 1.7 trillion euro worth of assets through March 2017.
The BOJ was also widely expected to ease further at its meeting on September 20-21, although analysts varied widely in their predictions on whether Japan's central bank would increase asset purchases or cut rates further into negative territory.
But despite all the easing, the global recovery has been "pretty sub-par," Coulton noted, pointing toward rising wealth inequality. In the U.S., the share of income that's gone to the owners of capital has surged compared with the share going to the workforce, he noted.
"U.S. corporates have been seeing an increasing cash surplus, they've been getting an increasing share of the income that's been generated by the economy, but they've not been recycling that into capex," he said.