A Bad Stall on the Road to a Monetary Normal (US)

Summary

  • The recent change in US monetary policy demonstrates like little else the stall on the global road to monetary ‘normal’. We are very far away from normal even into the tenth year of expansion in the global business cycle.
  • The change in US interest rate expectations is already substantial and interest rate markets got there well before the US Federal Reserve.
  • Central banks everywhere have less capacity to stimulate into the next downturn. This has implications for the way monetary and fiscal policy will be conducted in coming years.
  • The current choppy market environment correctly picks up the high level of economic uncertainty associated with these trends.
  • Risky assets initially liked the move to an easier monetary stance. Second thoughts could be creeping in.

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Aon Hewitt Limited is authorized and regulated by the Financial Conduct Authority.

Nothing in this document should be treated as an authoritative statement of the law on any particular aspect or in any specific case. It should not be taken as financial advice and action should not be taken as a result of this document alone. Consultants will be pleased to answer questions on its contents but cannot give individual financial advice. Individuals are recommended to seek independent financial advice in respect of their own personal circumstances. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Information contained herein is for informational purposes only and should not be considered investment advice.

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