Taking a breather from economic tinkering
Central bankers are taking a break rather than hitting the brake, Bloomberg said.
Federal Reserve Chairman Ben Bernanke, European Central Bank President Mario Draghi and their counterparts at the Bank of England and Bank of Japan aren’t taking signs of recovery for granted. That’s a shift from 2011, when some greeted an improving outlook by considering or embracing tighter monetary policy, only to see expansion fade.
The bid to guarantee growth suggests that officials at the four key central banks won’t hurry to pull down the $9 trillion wall of money on their combined balance sheets or boost interest rates stuck near record lows. They also stand ready to add more stimulus if the recent rebound proves to be another false dawn.
“The major central banks have learned there are deep, pernicious problems,” said Nathan Sheets, New York-based head of international economics at Citigroup Inc., who held a similar position at the Fed until August. Now they are taking a cautious approach on where their nations’ economies are headed “and a more stimulative stance of monetary policy.”
Cumberland Advisors Inc. and Fidelity Worldwide Investment have bought equities and commodities in response, and Credit Suisse Group AG advises investors to focus on assets such as equities and gold that tend to gain amid long-term inflation. A Credit Suisse index of nine stocks that benefit from synchronized quantitative easing — including Paris-based Electricite de France SA, the world’s largest nuclear-power producer — has risen about 19 percent in the past six months.
Officials now are taking stock after seeking to revive economies in one of the most rapid-fire rounds of monetary easing since the global financial crisis began five years ago.