Central banks around the world are committed to not return to a conventional monetary policy – The Economist

The central banks in the world are committed to not return to a conventional monetary policy

Mario Draghi, ECB president also entered the ring and said that acting too late to combat low inflation is riskier I do it too fast.

the world’s central banks have lost hope of returning to a conventional monetary policy in the short term and now promote overtly reliefs and go deeper into uncharted waters of unorthodox policies.

major central banks around the world have adopted a moderate tone in recent times, citing risks in emerging markets, the economic slowdown in China and ultra Low inflation by plunging oil prices.

that suggests that global interest rates are likely to decline further and raises the risk of causing a vicious circle of competitive devaluations and increase doubts among banks plants that can fulfill their mandates.

that contrasts strongly with the outlook at the beginning of the year. At that time, the Federal Reserve (Fed) of the United States and the Bank of England planned rates and the European Central Bank (ECB) said it expected to have reached the end of its monetary policy relief.

But William Dudley, president of the New York Fed and one of the most influential members of the Federal Open Market Committee of the Fed, threw cold water on any hopes of a rate hike this year.

“One thing I think I can say with confidence is that financial conditions are considerably harsher than at the time of the December meeting,” when the Fed raised interest rates for the first time in nearly a decade, said Dudley.

“so if economic conditions remain upon arrival at the March meeting, we would have to take that into consideration in terms of the monetary policy decision,” he said.

a rate hike from the Fed scheduled for March suggested the market could be three or four hikes this year, but those expectations have dissipated.

Haruhiko Kuroda, governor of the Bank of Japan has reported not hesitate to ease monetary policy further to achieve the inflation target of 2% “as soon as possible.” The company surprised the markets with a rate cut last week in negative territory.

“The biggest risk to the world economy at this point is an aggressive policy of devaluation in China” recently explained the head a major European bank. “With uncertainty and high volatility, would have great consequences for all economies”, he said.

The Bank of China has been striving to keep the yuan stable since January 6, when his second sharp depreciation in six months sparked fears of further devaluations in so far as growth slows in the second largest economy in the world.

Mario Draghi, ECB president also entered the ring and said that acting too later to combat inflation low is riskier than doing too quickly.