More of the Same
by Richard Stutley, CFA
Quote: “just right, then, is a continuation of current policy and hence central bankers need to hold their nerve in the face of rising inflation and provide more of the same”
The tale of Goldilocks and the Three Bears was a popular analogy in markets in the years post the Great Financial Crisis, used to describe the global economy as not too hot, not too cold, but just right. Extending the idea to today’s central bank policy: too hot would be embarking on helicopter money or large scale debt forgiveness; too cold would be abandoning tools like quantitative easing, possibly in response to criticism of QE’s role in fuelling asset price bubbles; just right, then, is a continuation of current policy and hence central bankers need to hold their nerve in the face of rising inflation and provide more of the same.
Market Snapshot
- Global equities rose 1.7% last week
- The US Senate acquitted former President Trump of incitement to insurrection
- Brent crude rose 5.2% last week to $62.4 a barrel
- Gold rose 0.6% to $1824.23 per ounce