Can central banks still be effective?

Weekly Market Compass: Also, six global issues to watch this week

Time to read: 6 min

Last week was a momentous one for central banks — the minutes from the March Federal Open Market Committee (FOMC) meeting were released, giving us insight into the Federal Reserve’s views on the global economy and rate cuts, and the European Central Bank (ECB) decided to remain on its ultra-accommodative path. We were reminded that central banks are critical for supporting growth, controlling inflation and stabilizing economies — a task that is growing increasingly difficult as these institutions become more politicized.

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Three key takeaways from four days in Europe

Weekly Market Compass: Brexit, the ECB and the eurozone economy were the main topics of conversation

Time to read: 5 min

Last week I had the pleasure of traveling in Europe, meeting with colleagues and clients in several different countries. It was a whirlwind tour, but it was well worth the jet lag to get an in-person account of the various issues facing Europe today. Below, I share three key takeaways from my trip.

1. A silver lining to Brexit.

It’s clear that Brexit is nothing short of a disaster.

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Six issues to watch in April

Weekly Market Compass: What will we learn from upcoming data releases and political negotiations?

Time to read: 5 min

The first quarter of 2019 was a wild ride for capital markets — equities and government bonds rallied as US Treasury yields and German bund yields sunk. This was a clear dichotomy, indicating optimism in the stock market but pessimism about the global economy. I believe this reflected more accommodative monetary policy from the Federal Reserve and other central banks, suggesting a more supportive environment for risk assets such as equities, while weakness in some economic data suggested a slowdown in global growth, pushing yields down. In this week’s blog, I discuss six current issues that could impact capital markets in April and beyond.

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A dovish Fed and an inverted yield curve spark market concerns

Weekly Market Compass: Also, will the third time be a charm for Theresa May’s Brexit plan?

Time to read: 4 min

Monetary policy disruption was on full display last week: The Federal Reserve (Fed) announced a momentous change to its normalization plan, the yield curve inverted and sparked investor concerns, and a noted Fed critic was nominated to the central bank’s Board of Governors.

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Politicization: A growing threat to central banks

Weekly Market Compass: Instead of attacking central banks, some politicians want to use them as a policy tool

Time to read: 6 min

The United States has always had a difficult, complicated relationship with the concept of central banks. Early on, critics sought to prevent the establishment of a US central bank, while today, politicians in the US and around the world seek to use central banks as tools to further their policy aims. In my view, central bank independence is critical to their ability to counteract the economic effects of geopolitical chaos.

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