Central Bank Action in pictures

Mass easing in action…

Note: Easing includes rate cuts (not only key policy rate cuts), lower capital reserve requirements, quantitative easing and currency depreciation/target forex policy changes

The negative interest rate policies are here to stay…

Short rates in developed markets keep falling, approaching the zero bound, as central banks keep easing in an attempt to fight against low inflation, sluggish growth, and currency appreciation; many emerging economies have reversed past hikes, even if Russia’s rate rise has distorted the downward trend. 

Two European central banks have cut official rates into negative territory (Sweden, Switzerland), with the Danish central bank cutting the certificate of deposit rate below zero, in an effort to fight deflation and currency appreciation. Lower energy prices have allowed a number of emerging market central banks to ease further (Indonesia, Turkey, India); lower commodity prices have prompted the Canadian and the Australian central bank to loosen their monetary stance.

Breadth of easing

The level of current monthly easing is a long way from the levels seen in 2009, it is however unusually high for the stage of the business cycle (global economic recovery).

 

During the easing cycles of 2001 (Tech bubble) and 2009 (Global Financial crisis) there were, on average, 10 key policy rate cuts per month; in the first two months of 2015 the number of average cuts is 7…

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