Central banks: between the proverbial rock - ANZ

Analysts at ANZ noted that central banks are finding themselves between the proverbial rock (stubbornly low inflation) and hard place (financial stability risks from debt loads and asset prices that they themselves inflated). 

Key Quotes:

"Central banks have done their best to prepare the path, and the Fed has successfully gotten several hikes under its belt without the world ending. But once central banks start tightening in concert, and their QE-bloated balance sheets start unwinding, it is fair to say that bonds, equities, house prices and other asset markets will face stiffer headwinds than they have for a long time."

"Currency volatility is another likely outcome of the central bank ship slowly turning, as was evidenced by the CAD and GBP overnight. Central banks will be very cautious in their approach. But volatility across equities, bonds and currencies has been abnormally low for a long time. When it finally turns, it could be dramatic, and very likely simultaneous across markets."