A More Malleable Fed - Updates - CRR, NWH, HOM, BSR, DRG
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A softening tone on monetary policy is the new message coming from the world's central banking community. This has been the stimulus for the January market recovery. It also marks the end of a 5 year phase of central banks raising interest rates, or talking about doing it.
The last major watershed for central banks, the Global Financial Crisis in 2007 set off a period of declining rates lasting until 2013. From 2013 until mid Jan-2018 central bank strategy was to mop up after all the stimulus applied to recover from the Global Financial Crisis. They were not able to raise interest rates as much as they would have liked, but lack of inflation and politics got in the way.
It is still early days for central banks as they begin a new policy direction. Speculating about the best and worst outcomes from this shift establishes some initial boundaries that are discussed later in this update.
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