Newell Palmer: Monthly Economic Notes – March 2019
In January, the US Federal Reserve put on hold its previously flagged program of interest rate rises and quantitative tightening. The European Central Bank has laid the groundwork for doing the same. The RBA has similarly signalled the possibility of interest rate cuts. The markets liked it and equity markets have rallied since January. The standard narrative is that having dealt with the GFC, central banks are trying to stimulate growth via low rates while flooding the interbank market with liquidity. This will force greater investment in risky assets, reflating the economy. Normalisation will proceed once this is achieved.