Global central bankers are again in the driving seat when it comes to
propping up the world economy, but many are demanding governments join them in the rescue effort.Amid slowing global growth, the Federal Reserve, European Central Bank and perhaps even the Bank of Japan are all set to ease monetary policy in coming months. But with less room to act than in the past, their leaders are telling politicians they will need to assist if a downturn takes hold.
The pressure could be applied in person on Wednesday when central bankers and finance ministers from the Group of Seven nations meet for talks north of Paris. They convene at a hazardous juncture for the global economy, as an unpredictable trade war risks precipitating a deeper downturn, and some bond markets hint at a growing possibility of a recession.
G-7 host nation France may even offer a reason to take note. President Emmanuel Macron’s 17 billion euros ($19.2 billion) of support for consumers in response to the Yellow Vests protests may have been contrary to his deficit-reduction mantra, but is proving fortuitous amid a global slowdown. French growth in 2019 is expected to outpace the euro-area average for the first time in six years.
“We are seeing political risks rising everywhere, so addressing the lack of growth that benefits all is quite urgent,” said Laurence Boone, chief economist at the OECD. “That cannot be achieved only through monetary policy.”
France’s GDP is expected to be more resilient than peers this year.
While Powell of the US has warned the U.S. fiscal position is unsustainable in the long-run, he said last week it’s “not a good thing to have monetary policy being the main game in town.”
The U.S. got a boost in 2018 from President Donald Trump’s $1.5 trillion tax overhaul, but that effect is fading.
Read more at: Central Bankers Are Sick of Rescuing the World Economy Alone - Bloomberg
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