For all the hopes of healing world markets, it’s hard to see how a ‘jarring January’ suddenly becomes ‘feel-good February’.
‘Febrile’ might be a better descriptor.
Tension is now growing between central banks and governments, urging calm, and global investors nursing heavy losses from one of the worst starts to the year on record.
Unnerved by the oil collapse and its fallout, China’s yuan ‘trilemma’ and growing fears of world recession, for many money managers this will be at best a long haul with no easy fixes.
“Central banks, although remaining vigilant on financial stability, are progressively losing effectiveness, and may fail to effectively curb market volatility in the medium term as they did after the Great Financial Crisis,” said Giordano Lombardo, Group Chief Investment Officer at Pioneer Investments.
So do policymakers go up a gear or stand back a little and hope warm words and small monetary tweaks limit the shakeout?
So far, they are sticking to the script. Measures mooted over the past two weeks are all consistent with G20 finance chiefs, meeting in Shanghai on Feb. 26 and 27, reading straight from last year’s playbook.
Sticking to standing G20 communiques, central banks have so far been true to the pledge “to monitor financial market volatility and take necessary actions.”