Central banks around the world, led by the U.S. Federal Reserve, have taken a newly accommodative tilt. New blog contributor Jeff Shen reveals what big data has to say about monetary policy, and why investors may have reason for caution.
It’s summertime and the central banks are … well, easy. The Fed’s pivot to a more dovish monetary policy stance since May has been followed by a generalized move among other central banks in the same direction. Rhetoric from Fed Chairman Jerome Powell has been closely watched and markets have largely cheered the idea of lower policy rates―starting with a hoped-for cut at the end of July.
自5月以来美联储转向更为鸽派的货币政策立场之后，其他中央银行也采取了相同方向的普遍举措。美联储主席鲍威尔的言论受到密切关注，市场基本上对降低政策利率的想法感到欢欣鼓舞 - 从7月底希望的降息开始。
Yet there’s a big “but” to consider. The fact that this pivot has happened at a time when the economy appears to be doing well and risk assets are rallying is a source of confusion.
The Fed has indicated the main reason for its dovishness is the consistent undershooting of its 2% inflation target. This is happening while labor markets remain strong, even as the U.S. economy appears to be entering the final stages of the current expansionary cycle. This confluence of factors is stoking concern.
Does the Fed need to start an easing cycle to ensure the U.S. economy can keep humming? And even if it does make that shift, would other central banks necessarily be on the same course?