The Pendulum of Central Bank Policies: Discerning the Effects on Asset Prices

The outlook for central bank policy in advanced economies has gyrated enormously so far this year. In the case of the Fed, rates markets expected deep policy rate cuts early this year only for those expectations to reverse dramatically in the past few weeks. Given the U.S.'s outsized role in driving global financial conditions, the repricing has important spillovers to the expected setting of central bank policy in the rest of the world. Such expectations matter hugely for asset prices as central bank policy directly influences interest rates, while revealing information about the central banks macroeconomic outlooks.

Our experts Katharine Neiss, PhD, Deputy Head of Global Economics and Chief European Economist, Tom Porcelli, Chief U.S. Economist, and Guillermo Felices, PhD, Global Investment Strategist, share our latest thinking on central banks' policy in advanced economies and their likely implications for asset prices.