Join Chief Market Strategist Joseph Trevisani in an exclusive FX Street webinar on the effects of central bank policies on the world economy this morning at 11:00 am Eastern Time.
Central banks are the dominant force in trading markets worldwide. The policies of Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan and their colleagues have become, more than ever in history, the determining factor in market direction. The United States Federal Reserve has led the way with efforts that stretched the boundaries of traditional monetary policy. The success of the Fed’s endeavors in promoting economic growth have been limited but the effect of quantitative easing on markets has been pronounced.
The era of quantitative easing and low interest rates will end and when it does the economic effects will depend on factors external to monetary policy. If economies have recovered from the effects of the recession, the financial crash and the bubble economies of the last decade and if they have reformed their structural impediments to growth and expansion, the gradual return to a more normal monetary world may be benign. That is not likely to be true for the trading markets. We will discuss the implications and possible dangers of the end of central bank liquidity on the currency, commodity and credit markets and speculate on the potential timing.