Over the past week, he has been deciding on years of rates in the United States, Britain and many countries using the euro. Although it has been started in recent months by the central banks of some developed countries (Australia, Norway) with increasing years of rates, the central banks of the world’s largest economies have not yet shaken a similar scene.
This was clear from the accompanying comments, which banks published one by one during the week.
For example, the US Federal Reserve (Fed) on Wednesday, after leaving the base rate at 0.25%, in its accompanying commentary reminded traders to fully maintain rates for a long time at very low levels.
As she said in the comment, rates can increase and only when the situation on the labor market begins to improve and you use the capacity in the economy to push down consumer prices. However, it may take a very long time, or in the next year the US economy will have to deal with it as a result of the gradual fading of the fiscal and the monetization of the economy, together with a high unemployment rate, which will severely reduce the decline of American consumers.
The European Central Bank is not planning to raise rates either
There were no signs of meeting the rate hike in the week or from Frankfurt, where the European Central Bank (ECB) published it. For the time being, this is not the only reason for rates to increase, when consumer goods prices fall year-on-year, the level of expansion has stopped and the European currency will continue to fall below USD 1.50.
The ECB’s position is further complicated by the fact that if the Fed starts two non-Fed monitors, it will strengthen the European currency very sharply, which would worsen the situation of European exports, which are among the main drivers of GDP growth in the largest euro area countries.
On Thursday, the ECB, Jean-Claude Trichet, only indicated that in the next year it could use decommissioning of non-standard liquidity support measures. However, she preferred not to provide details, given the rather marked disagreement within the Governing Council of the ECB.
Probably the furthest from anything that might be reminiscent of the effort to do anything with a massive monetary expansion, however, is the Bank of England. She was the only one who decided in the week to start printing more pensions. While leaving rates unchanged at 0.50%, she said she intended to increase her reserves with new £ 25 billion in bonds. The total purchase will thus reach £ 200 billion, making the Bank of England one of the most aggressive central banks in the world.
Even in this case, the paradoxical market took the decision of the bank more as a sign of a gradual removal of the foot from the gas, when most estimates of traders even stumbled with the fact that the bank could announce the purchase of bonds in nominal terms and 50 billion pounds.
Commodity prices may not fall again
For many years now, rates in the world’s largest economies have evidently been moving out of the city for a very long time. This means that inflation, driven out by commodity prices, equities, bonds and other financial assets, may not fall again in the near future. The excess liquidity, which central banks are not going to withdraw quickly, can support these inflated prices for some time. However, their possible correction may not take a long time.
The fact that the crisis cannot be resolved from the printing press, but traders will be able to see it, especially in the second half of the first year. The largest worlds in the economy are underwent to support the fiscal and monetary crutches, and they will have to stand on their own two feet, which they do not have the strength to do.