Central banks still pressing to reduce borrowing costs
Central banks still pressing to reduce borrowing costs
Central banks across five continents are undertaking the broadest reduction in borrowing costs since 2009 to avert a global economic slump stemming from
Europe’s sovereign-debt turmoil, Bloomberg reported.
The United States, the United Kingdom and nine other nations, along with the European Central Bank, have bolstered monetary stimulus in the past three months. Six more countries, including Mexico and Sweden, probably will cut benchmark interest rates by the end of March, JPMorgan Chase & Co. forecasts.
With national leaders unable to increase spending or cut taxes, policy-makers including Australia’s Glenn Stevens and Israel’s Stanley Fischer are seeking to cushion their nations’ economies from Europe’s crisis and a U.S. unemployment rate that is stuck near 9 percent, Bloomberg said.
Brazil and India are among countries where easing or forgoing higher interest rates runs the risk of exacerbating inflation that is already higher than desired levels.
“We’ve seen central banks that were hawkish begin to turn dovish” against a “backdrop of austerity” in fiscal policy, said Eric Stein, who co-manages the Eaton Vance Global Macro Absolute Return Fund in Boston. “You could debate how bad (global economic challenges) will be for growth, but it can’t be good.”
Monetary easing will push the average worldwide central bank interest rate, weighted for gross domestic product, to 1.79 percent by next June from 2.16 percent in September, the largest drop in two years, according to data and projections from JPMorgan, which tracks 31 central banks.
The number of those banks loosening credit is the most since the third quarter of 2009, when 15 institutions cut rates, Bloomberg said.
Low short-term borrowing costs through at least the end of 2012 mean that “markets that provide reasonably good interest income should perform well,” said James Kochan, chief fixed-income strategist at Wells Fargo Advantage Funds.
Central banks across five continents are undertaking the broadest reduction in borrowing costs since 2009 to avert a global economic slump stemming from Europe’s sovereign-debt turmoil, Bloomberg reported.
The United States, the United Kingdom and nine other nations, along with the European Central Bank, have bolstered monetary stimulus in the past three months. Six more countries, including Mexico and Sweden, probably will cut benchmark interest rates by the end of March, JPMorgan Chase & Co. forecasts.
With national leaders unable to increase spending or cut taxes, policy-makers including Australia’s Glenn Stevens and Israel’s Stanley Fischer are seeking to cushion their nations’ economies from Europe’s crisis and a U.S. unemployment rate that is stuck near 9 percent, Bloomberg said.
Brazil and India are among countries where easing or forgoing higher interest rates runs the risk of exacerbating inflation that is already higher than desired levels.
“We’ve seen central banks that were hawkish begin to turn dovish” against a “backdrop of austerity” in fiscal policy, said Eric Stein, who co-manages the Eaton Vance Global Macro Absolute Return Fund in Boston. “You could debate how bad (global economic challenges) will be for growth, but it can’t be good.”
Monetary easing will push the average worldwide central bank interest rate, weighted for gross domestic product, to 1.79 percent by next June from 2.16 percent in September, the largest drop in two years, according to data and projections from JPMorgan, which tracks 31 central banks.
The number of those banks loosening credit is the most since the third quarter of 2009, when 15 institutions cut rates, Bloomberg said.
Low short-term borrowing costs through at least the end of 2012 mean that “markets that provide reasonably good interest income should perform well,” said James Kochan, chief fixed-income strategist at Wells Fargo Advantage Funds.
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