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Monday, August 8, 2016

BARCLAYS: There is nothing left to fight the coming economic storm...

Will Martin
Business Insider
August 8, 2016
The ability of policymakers to stimulate economic growth is dwindling rapidly, and both central banks and governments around the world are running out of options, according to new research from analysts at Barclays.
In Barclays’ Global Economics Weekly note, subtitled “Diminishing policy power” — analyst Christian Keller argues that if the world faces an “adverse shock” to its economy, then the ability of central banks or government, either through fiscal or monetary stimulus, is “increasingly exhausted.”
Since the financial crisis, central banks around the world have embarked on unprecedented levels of loose monetary policy, cutting interest rates and launching huge packages of quantitative easing to try and facilitate inflation and economic growth. The level of easing is such that, as Bank of America Merrill Lynch noted on Friday, central banks have now cut interest rates 666 times since the collapse of Lehman Brothers in 2008. The Bank of England’s cut from 0.5% to 0.25% last Thursday is the latest.
All of this policy action hasn’t stimulated anywhere near as much activity as expected. Growth around the world still remains subdued, with the eurozone — where interest rates are below zero, and bond buying programmes have been enormous — particularly weak. The problem, Barclays says, is that there’s now not much more the likes of the European Central Bank can do to boost the economy.

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