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Monetary politicies in 2017 and beyond - 2017: A transition year for the central banks?


The essential

Again in 2016, the central banks of the developed countries loosened their monetary policies just a bit more: except for the Fed and the Bank of Canada, the central banks of all the other G-10 countries all loosened their monetary policies, either by lowering key interest rates or by inflating their balance sheets.

After years of procrastination, the projections for the fed funds of FOMC members for 2016/2017 seem more credible with the new US administration (slightly higher growth and inflation). However, the rise of the effective exchange rate of the US (the rise of the fed funds will actualize the divergence of monetary policies) will prevent a rapid tightening cycle. The ECB will pursue its QE at the current pace and validate that key rates will not be cut further. The BoJ will pursue its QE and should not change its long rates target. Emerging economies are divided into two groups: commodity-exporting countries which, due to the sharp depreciations of their currencies, have experienced very high levels of inflation and other countries that have faced deflationary pressures. The monetary policies of countries with low levels of inflation have been and should remain accommodative and those of other countries should become so, in line with the decline in inflation. However, US monetary policy could become a game changer  if the Fed’s rate hikes were more pronounced than expected.

Focus :

Why are investors so sceptical on the outlook for European banks ?



CROSS ASSET (Download)

November 2016

November 2016

The Article



QE and negative interest rates Monetary policies have reached their limits

Monetary policy has reached its limits. Interest rates are in negative territory, and this is now counterproductive. The financial fragmentation and dysfunctions of the interbank market cannot be solved by the ECB alone: disintermediation, economic growth and the relaying of fiscal and fiscal policies are indispensable levers. The ECB faces problems of liquidity on sovereign debt, which clearly shows the limits of an administered market.

PHILIPPE Ithurbide,

Global Head of Research, Strategy and Analysis


Read more


 En savoir plus


AINOUZ Valentine , Deputy Head of Developed Market Strategy Research
HERVE Karine , Emerging Markets Senior Economist
DRUT Bastien , Senior Strategist at CPR AM
JI Mo , Amundi Hong Kong Chief Economist
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Monetary politicies in 2017 and beyond - 2017: A transition year for the central banks?
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