Since the Fed cut rates in October, its third and final reduction in borrowing costs in 2019, policymakers have agreed to keep their target policy rate in the current range of 1.50% and 1.75% until there is some significant change in the economic outlook.
The chart shows the markets took off when the central banks started expanding their assets through the Quantitative Easing (QE) programmes.
Atlanta Federal Reserve bank president Raphael Bostic said that for him there is a "high bar" for any rate increase until inflation moves convincingly to the Fed's 2% target, and that evidence of excessive borrowing or financial instability in the economy would have to be "systemic" for him to think otherwise.
At a three-day conference in San Diego on an array of economic topics, one stood out: The textbook view of central banking, where low unemployment produces unwanted inflation that monetary policymakers can counter with interest-rate hikes, is at least badly hobbled if not fully broken.
High cost of capital is a big spoiler for investors. RBI’s latest auction comes as a whiff of fresh air
Fiscal policy has come to centre of the macroeconomics world, which has long been dominated by monetary policy
The December 6 jobs report provided a respite from all the pessimism and from the continuing uncertainty over the status of US-China trade negotiations
RBI’s own track record has been poor with no woman Governor and 3 women Deputy Governors in 2000s
And the Fed's policy-setting Federal Open Market Committee made a key change in the wording of the statement, which makes it less certain it will make another move in December.
In effect, the current rate decision is not a start of a series of policy rate cuts which normally accompany severe economic slowdown or a recession.
Fed Chairman Powell cited global weakness, simmering trade tensions and a desire to boost too-low inflation in explaining the central bank's decision to lower borrowing costs
Fedspeak has got a makeover and now means clear and transparent communications to guide financial markets
The Fed left its federal funds rate on hold last week as expected, but its "dot plot" projections shifted and now suggest no hikes in 2019 compared with two in December. A Reuters poll taken just two weeks ago predicted one hike this year.
An emerging market country like India will need to be prepared and carefully respond to the evolving global economic situation.
The rapid changes in the monetary policy stances of global central banks have led to the market repositioning
Series of stance changes from the global central banks and RBI, along with sudued commentary on inflation creates a timely monetary policy space for growth. We expect financial market conditions would also ease out as the event risks gets mitigated. However as we go closer to deadlines 1st March (Trade truce) and (29th March) Brexit and end game plays out – volatility will remain elevated.
The Fed last week left its target range for short-term interest rates unchanged at between 2.25 percent and 2.5 percent, and in what was widely viewed as a dovish shift said it would be "patient" in making any further adjustments to borrowing costs.
The rule for the US Fed now seems to be: don’t fight the markets
The last time America, the world's No.1 economy experienced such an episode was in the 1970s and early 1980s. Stagflation occurs when the economy suffers from high inflation and high unemployment.
Powell said in remarks at a Fed award ceremony that these challenges remain even though unemployment is near five-decade low and the financial system has been bolstered since the 2008 financial crisis.
The Fed's nearly three-year-old tightening cycle has in part prompted a global shift in capital away from emerging markets, leading this year to sharp and painful currency plunges in Turkey and Argentina, in particular.