What’s so cheered central bankers worldwide in recent days? NAB asks:
“Why have central banks become hawkish all of a sudden?”
The link between monetary policy and the real economy is working
The link between a growing real economy and inflation is more subdued than in the past, but the factors holding this back are temporary and thus brings the fear of inflation breaking out as the economy continues to improve
Financial conditions are becoming easier as the real economy expands
Thus a constant policy stance is becoming more accommodative.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
