With inflation coming under control around the world, major central banks have embarked on a shift in monetary policy to spur demand and foster economic growth,
In the past two days, the Bank of Canada and European Central Bank kicked off this regime change with the announcements of 25 basis-point rate cuts.
This is just the beginning of what is expected to be a sustained, orderly reduction of interest rates around the world, RSM’s chief economist Joseph Brusuelas wrote in Barron’s in April:
This shift to rate cuts will spur global growth, support risk assets, increase corporate profits, and smooth out bond market volatility. But it needs to happen soon, before elevated rates extract an unnecessarily high toll on the global economy.
Brusuelas noted that there will be differences among the major central banks in their approach, with Japan being the exception. But the central banks share a common goal: to foster growth and spur demand before economies fall too far into a slump.
Read the full opinion piece in Barron’s.
