Central bankers are giving out easy money

"I want theasy_moneye easy
Easy money
Easy money
I want the good times
Oh, I never had
I want the easy
Easy money
I want the good life
I want it bad"  -- Billy Joel

Central Banks are easing again

Economies around the world have been slowing and the collapse in oil prices kept inflation close to zero, well below the 2% targeted by central bankers in the developed markets. These developments have led to another round of global monetary policy easing in the first few months of 2015. The ECB led the charge with a plan to purchase at least €1.1 trillion over the next 18 months. This will push their balance sheet toward the Fed's $4 trillion mark by year end 2015. But the ECB wasn't alone as the PBOC and 15 other central banks eased monetary conditions since the start of the year. Switzerland, Sweden and Denmark cut their key policy rates into negative territory!

The Fed turns cautious on raising rates

With the rest of the world easing, the Fed is likely to get more dovish on the margin. At the beginning of the year, economists were expecting the Fed to raise rates by mid-year. However given recent weak economic data, traders are now betting on an October or December timetable. We don't believe that the Fed will raise rates at all in 2015 because inflation is likely to remain very low and GDP growth expectations continue to fall.

Easy money

With monetary conditions getting easier in 2015, stock markets should be the beneficiaries over the short term. Germany and France produced huge gains in the first quarter of nearly 20%. Yet there is increasing skepticism about the beneficial effects of quantitative easing on the real economy and concerns about asset bubbles. Here is chart of all the major policy moves which were largely all surprises versus expectations.


New Call-to-action

Share This Story, Choose Your Platform!

About the Author: Chris Wang

Chris Wang


Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Runnymede Capital Management, Inc.-"Runnymede"), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Runnymede.  Please remember that if you are a Runnymede client, it remains your responsibility to advise Runnymede, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Runnymede is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Runnymede's current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Please Note: Runnymede does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Runnymede's web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Search Website

Annuity Review Database

Follow Our Podcast

Google Podcasts
Apple Podcasts

Recent Posts