Central banks can’t lift inflation, but they can weaken growth

Perpetual Equity Investment Company

Perpetual Asset Management (Australia)

It is clear that central bank’s ability to drive growth and control inflation is waning, with disinflation impacting all major economies given the surge in investment in economic capacity in response to weak growth after the GFC. Despite ultra-accommodative policy settings with zero interest rates in most advanced economies, and QE programs in the US, Japan, Europe and the UK, disinflation and deflationary pressures have clearly had the upper hand in recent years. Indeed, record numbers of OECD countries have inflation below 2% and 1% (see Chart 1) and 14 of the 15 largest advanced economies have inflation below 2% While central banks can’t improve the state of the global economy or increase inflationary pressures, policy mistakes can generate asymmetric risks. In this light, the US Fed would be foolhardy to think it can raise rates without ramping up risk premiums given the current market stress. Cheap monetary policy alone is not our saviour this time around and governments need to address the structural constraints to growth instead of asking others to do it for them. To read more (VIEW LINK)


Perpetual Equity Investment Company
Perpetual Asset Management (Australia)

The Perpetual Equity Investment Company Limited is an ASX listed investment company offering investors access to a portfolio of predominantly high quality Australian and global listed securities, selected by Perpetual Investment Management Limited.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.