To sum up this week’s central bank actions:
- The Bank of England is now a bit less likely to raise interest rates as oil’s fall has given them a bit more maneuvering room regarding inflation.
- Canada is concerned about overall growth, and they are acting accordingly. As an aside, this may give the Bank of Australia an intellectual justification for action as well, given some of the underlying similarities between the economies
- Brazil’s problems are deepening. Growth is stagnant, but inflation is becoming more and more entrenched. The central bank may have to engage in far more aggressive policy actions to finally take inflation out of the equation.
- The BOJ is in a policy bind. They are already flooding the market with yen, yet inflation’s Y/Y growth is clearly moving lower. It’s logical at this point to ask if they’re at or very near the end of their viable policy responses.
- The ECB FINALLY did something about inflation. While the size of their policy response has caught some by surprise, the fact it took nearly a year into their deflationary experience is very concerning, and leads to the question of “is this occurring too late.”