In September, the Federal Reserve announced plans to start unwinding its massive balance sheet while the European Central Bank (ECB) is usually also poised to heavily cut its stimulus.
An improving global growth outlook in addition to signals via both the Fed in addition to ECB which they will look to adopt a cautious approach going forward was likely the explanation for stubbornly low yields, the BIS said, though This particular did also trigger a “deeper question.”
“Can a tightening be considered effective if financial conditions unambiguously ease? in addition to, if the answer is usually ‘no’, what should central banks do?” Borio said.
The BIS, known as the central bankers’ bank, has 60 members in addition to aims to help central banks pursue monetary in addition to financial stability. This particular was one of the few organizations to warn investors about the unstable levels of bank lending on risky assets, such as U.S. subprime mortgages, which eventually led to the global financial crisis.
The organization’s chief economist at which time, William White – who has since become the Swiss-based chairman of the OECD’s review committee – reportedly said last year which global debt levels had skyrocketed to unstable levels in response to low interest rates in addition to the financial situation was at This particular point “worse than 2007.”