Central Bankers Seek More Action On Global Economy

CENTRAL bankers seem to love thinking of themselves as sober, serious individuals, always alert to the potential risks of their actions. Some of them, anyway. Consider this, from Jon Hilsenrath:Three global central-bank leaders warned that decision makers needed to be on alert for an array of risks associated with their easy-money policies.

The world’s major central banks may be shifting their tone subtly from “whatever it takes” to “we can only do so much”. Financial markets supercharged this year by the extraordinary monetary stimuli of the top four central banks are once again asking how long this can last. Friday’s stall of this year’s global stocks market rally was blamed by many on fresh policymaker chatter about when the U.S. Federal Reserve will or should start to wind down its bond-buying and money printing programs, or “quantitative easing”.

Everyone knows that “too big to fail” banks are bad for the economy.  Indeed, even top bankers themselves say the big banks need to be broken up. Now, top bankers are saying that the amount of liquidity which the central banks are flooding into the economy is becoming dangerous.

Emerging economies are facing clear signs of inflationary threat, European Central Bank chief Jean-Claude Trichet said Monday after a meeting with fellow central bankers."We see clearly that there are inflationary threats that are particularly visible in the emerging economy area," said Trichet, following the meeting at the Bank for International Settlements.The EU central banker said his counterparts are "all very keen on anchoring inflationary expectations."There is a sense of unity of purpose" on this issue, he stressed.

There is not an ability of central banks to take all these risks out or set the seeds for a sustainable recovery Bank of Canada Governor Mark Carney, urging central banks to secure “escape velocity” for their economies, said there is still room for more monetary stimulus around the world if needed. In comments that may shed light on his thinking as he prepares to take over the Bank of England in July, Carney said policy in developed countries isn’t “maxed out” and that central bankers can be flexible in meeting inflation goals.

Michael Johnston submits:Emerging markets have seen their importance to the global economy swell in recent years, as the developing markets of the world have become the primary drivers of growth not only in their home markets but in advanced economies around the globe as well.