"There is no room for central banks to continue to maintain a loose policy."
After the pandemic hit, almost all central banks around the world implemented policy easing measures by lowering interest rates and also increasing the purchase of government bonds (tapering) to boost economic recovery.
However, after the measure was maintained for a long time, the central banks began to face another problem, namely the increase in the country's inflation rate.
Thus, in order to regain economic stability, measures to re -tighten policies need to be implemented to curb higher inflation.
With the return of the new wave of Omicron coronavirus variants, major central banks are beginning to falter to pursue policy tightening measures.
The Chief Economist of the International Monetary Fund (IMF), Gita Gopinath gave his view that central banks currently have no room to maintain policy easing and low interest rates.
According to him, the world is now in a phase where there is no room to continue to maintain loose policies and low interest rates while inflationary pressures continue to rise around the world.
He also warned the pandemic could result in larger -than -estimated losses with the expected additional loss of another $ 5.3 trillion after the previous loss projection of $ 12.5 trillion.
He was speaking at an event organized by the World Health Organization (WHO) to raise $ 23.4 billion for vaccines and tools to curb pandemics.
With the risk of a continuing pandemic, it is expected that supply disruptions will also be prolonged and add to inflationary pressures thus leading to an economic stagflation situation.
So, what are investors ’expectations of the outcome of the last 2021 policy meeting for the Bank of England (BOE), Bank of Japan (BOJ), Swiss National Bank (SNB) and Federal Reserve (Fed) next week? Continue to maintain policy relaxation or vice versa?
