Mohamed El-Erian Caution Central Banks To Use Their 'Time Outs' Wisely
Economist Mohamed El-Erian is cautioning key global central banks including the Bank of England, Bank of Japan, European Central Bank and the Federal Reserve, who have momentarily halted major policy actions.
In his op-ed in the Financial Times, El-Erian stated that these systemic central banks have paused to reassess the implications of their previous actions. Amid unchanged interest rates, they have left the door open for potential increases in the future.
The “time out” allows these banks to reflect on recent developments, tidy up minor issues, and integrate another round of historical data into their analysis. The central banks are keen on understanding the cumulative effects of their aggressive hikes
The Bank of Japan has gone a step further, incorporating a slight adjustment to its “yield curve control” policy, which aims to maintain low yields through bond purchases.
However, El-Erian warns that a narrow tactical framing might be problematic ...
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