Can the Fed, ECB, BoJ and PBoC Hold Back Another Wave?

Talking Points:

  • Negative rates and quantitative easing programs are growing increasingly common among major policy groups
  • The disparity in policy between Fed and its counterparts is a point of serious speculative, economic contention
  • If the global economy stalls or another financial falter develops, can monetary policy reset the system again?

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While the Fed has been the source of much speculation and debate, global monetary policy has generally pushed to a more accommodative stance. Rate cuts have evolved into negative rates for some while open-ended quantitative easing programs are almost common. Despite the ‘support’ however, the expected return has come up tangibly short. Inflation goals are still far out of reach, growth is struggling and (unofficial) capital market buoyancy is slipping. The question naturally arises as to whether monetary policy can achieve what central banks want it to. Will the Fed have to abandon is counter-trend tightening regime? And, perhaps more importantly, what happens if another economic or financial crisis arises with the world already awash with stimulus? We return to the discussion of monetary policy and its capacity to ‘save’ the global economy and markets in today’s Strategy Video.