Fed, BOJ, ECB, and BOE Seen Committing to Easing as Threat of Sluggish Growth Continues

By TraderVox.com

Tradervox (Dublin) – Most central banks around the world have moved to add stimulus to support their economies other than take measures to spur growth leading to speculation that global economic growth will decline. In the recent weeks, the market have experienced a loosely correlated global stimulus that begun with the Federal Reserve extending its “Operation Twist” program and refraining from a bolder step of adding stimulus. Central bankers from Japan to Europe are also considering further monetary easing as supportive measures of their own economies.

According to market analysts, the monetary policy makers are postponing forecasts for economic recoveries which indicate that they expect the measures taken to have little effect. This has raised concerns that world major economies will experience anemic expansion similar to one experienced in Japan since 1990s. According to Peter Dixon who is a Global Equities Economist in London at Commerzbank AG, indicated that Japan’s experience in the 90s show that it is possible for central banks to mitigate effects of the current crisis but they might fall short in stimulating demand which may lead to longer periods of sluggish economic growth and high unemployment.

Jan Loeys, who is the Chief Market Strategist at JPMorgan Chase & Co in New York, have cited economic weakness and policy indecisiveness as some of the major factors that investors are looking at when placing bets on greater quantitative easing. He recommended that investors consider US assets and gold as some of the safe assets and warned against taking peripheral Europe’s bonds. Such sentiments are expected to have great impact on the coming Italian bond auction which is set for later this week.

The major consideration in the central banks action around the world is being determined by the situation in Europe. This has forced them to come together in a coordinated effort to buoy the world economy as they struggle to device a solution for euro zone.

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