Central Banks Have Issued Their ‘Amber Alert’ ‘The Trouble Is The Central Banks Are Between A Rock And A Hard Place And Being Driven Into Action

investmentwatchblog.com / BY IWB · OCTOBER 31, 2017

Why is this not front page news in the west?

So it must be looking good, as super-loose monetary policy seems to have peaked and central banks are “talking the talk” and “walking the walk” for normalisation and tighter policy ahead. The US Federal Reserve has been doing this for nearly two years now, the European Central Bank has just started its taper and the Bank of England poised on “amber alert” for higher rates. Even the Bank of Japan is in wait-and-see mode.

The trouble is the central banks are between a rock and a hard place and being driven into action for the sake of being seen to be in control. Yet whatever they do has the same result – global borrowing costs are going up. If they do nothing, inflation expectations will rise and yields will push higher. If they tighten policy, then yields will still push higher. They are in a no-win situation.

Central banks know a lot more than they are letting on. It is the reason why the ECB went easy on its policy taper last week. Although it has scaled back its bond-buying programme, much to Germany’s chagrin it has still prolonged its special measures until the end of next year. It is plainly aware of the nuclear junk buried deep in the vaults of Europe’s financial system and needs to tread carefully.

http://www.scmp.com/business/banking-finance/article/2117548/central-banks-have-issued-their-amber-alert?utm_source=Direct

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