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Central banks are crucial for supporting growth, controlling inflation and stabilising economies - a duty that is growing increasingly difficult as these institutions become more politicised. A significant moment for Central Banks was last week when the MarcCentral Banks effectiveness?
Central banks are crucial for supporting growth, controlling inflation and stabilising economies - a duty that is growing increasingly difficult as these institutions become more politicised. A significant moment for Central Banks was last week when the March Federal Open Market Committee (FOMC) minutes 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. Fed rate cuts From the minutes of the March FOMC meeting, the Fed does not expect to raise rates this year as a result of the global economic slowdown and uncertainty over trade policy. It seems that the Fed is confident that it has acted quickly enough in changing its policy stance, that it does not need to do more any time soon, and that the US economy will be able to endure a global slowdown. This could be worrying, as the Fed may become satisfied in remaining with this holding pattern - just as it became satisfied about regularly raising rates last year. The minutes changed market expectations dramatically. As of end of March, a greater than 65 per cent probability was assigned to one or... Read more