Central banks have just 'surprised' markets with rate cuts. The ECB and PBOC did just that yesterday. Here is what I see.
Business and employment prospects are becoming worse (box 1).
But for those countries with a debt disease, the money will not go out to the real economy but remained trapped in financial institutions or asset markets (box 4). Those without this problem, especially the emerging economies (box 3) it helps.
Overall these latest rate cuts smacks of desperate acts in a world that since 2008 had failed to make use of the time central banks purchased for them to restructure and retool themselves.
I wonder what comes after all these. Looks to me like we are only waiting for matters to get worse before substantial and durable action would be taken.
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