Central bankers are making a statement – ABN AMRO

Han de Jong, chief economist at ABN AMRO, points out that in the recent days, a range of central bankers are all making similar statements.

Key Quotes

“Following the re-escalation of the trade conflict and the new Mexico threats by the US, and perhaps also in response to softish economic and confidence data as well as the poor performance of the stockmarket in May Fed officials suggested that they may lower interest rates. We think a lowering of US interest rates during the next couple of months is, indeed, now the most likely scenario.”

“The ECB followed suit. At his press conference Mr Draghi not only explained why the ECB had decided to extent their forward guidance of ‘no rate hike’ until the end of 2019 to the middle of 2020.”

“Last, the governor of China’s central bank, Yi Gang, stated that the PBoC and the Chinese government have plenty of policy options should it be necessary to provide much more stimulus to the economy. I think that is right.”

“Overall then, economic growth globally is soft and the re-escalation of the trade conflict is bad news for the near-term outlook. It is therefore not hard to understand why people are becoming more negative. However, I would say that there is no reason to become overly negative. Recessions still do not look likely within the next couple of quarters. And recessions are the real danger.”