![]() Beijing is also expected to use its policy leeway to keep rolling out stimulus measures to keep the world’s second-largest economy from cooling too much. ![]() Those who still have wiggle room have already been using it with central banks in Sweden, Poland and South Korea cutting interest rates over the past few days. It is less clear how and when will they respond. “It reminds me of the massive flight to quality we saw during the (2008) banking crisis, when there were fears that the whole global economy would tip into depression,” said Nick Stamenkovic, a strategist at Edinburgh-based RIA Capital Markets.Įconomists familiar with central bank policymaking say there is no doubt that officials are worried by the markets’ sharp turn for the worse. In fact, the sell-off could be seen bringing some healthy volatility back to markets that officials worried had become too complacent to risks ranging from tensions surrounding the conflict in Ukraine to the Ebola outbreak.īut the deepening of the sell-off may have put major central banks on their heels, by raising the prospect of the market rout going too far too fast, threatening to hurt confidence and potentially triggering a pullback in spending. When stock markets turned south last week after rallying for much of this year, many policymakers initially played that down. producer price and retail sales data fanned fears the world economy could be even weaker than thought. bond prices soared after weak Chinese inflation and U.S. Stocks slumped again on Wednesday pushing S&P 500 losses to almost 8 percent since mid-September. ![]() People pass the Bank of England in the City of London January 16, 2014.
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