Live Markets: Monetary policy's new era
LIVE MARKETS-Monetary policy's new era Adds new blog entry
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MONETARY POLICY'S NEW ERA
Time for central bank watchers to take a breath - the European Central Bank, Bank of Japan, Federal Reserve and Bank of England June decisions have all come and gone.
There's been hikes, holds, and of course Kevin Warsh's debut meeting - also a hold, but with a hawkish twist that has led to a shift in expectations for the rate path ahead.
But not just that.
"More broadly, this marks a clear shift in the global monetary policy backdrop. After a prolonged period of synchronized rate cuts across the Western world, the tailwind from monetary policy easing is behind us," Barclays said in a note.
The impact could reverberate across markets.
"Uncertainty around the reaction function of central banks, particularly the balance between growth and inflation risks, may contribute to higher bond market volatility. Crucially, if the Fed were to pivot more decisively towards prioritising price stability, as was indicated in the FOMC meeting, and shift into a renewed tightening phase, it would start to squeeze liquidity and weaken a key pillar of support that has underpinned bullish equity market returns over the past two years."
While Barclays note that this isn't their base case, it is certainly one more thing to keep an eye on.
(Sophie Kiderlin)
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EARLIER ON LIVE MARKETS:
BURNHAM BY-ELECTION IN THE BAG: WHAT IT MEANS FOR MARKETS CLICK HERE
EUROPEAN SHARES SET FOR POSITIVE WEEK CLICK HERE
EUROPE BEFORE THE BELL: RELIEF RALLY SET FOR PAUSE CLICK HERE
WHAT A GREAT WEEK FOR PEACE CLICK HERE