The U.S. Federal Reserve maintained interest rates at a 23 year high of 5.25% – 5.50%. However, Chairman Jerome Powell didn’t think it likely easing would commence in March, as many assumed previously. The Bank of England’s statement was not dissimilar in tone as it maintained its benchmark rate of 5.25%. It was the same story in the Eurozone where its record high rate of 4% remained intact with imminent rate cuts being talked down.
They all carry the baggage of being hopelessly wrong regarding the double-digit inflation they not only helped create, then misunderstood and finally allowed to explode, before launching emergency hiking programmes. Consequently, it is understandable they are now wary of cutting too soon as their collective RAP sheet is far too long, already; such are the resultant problems when years of egregious meddling distort natural economic cycles.
That said, conditions in China do not make the job of central banks any easier. While a market of 1.4bn people is difficult to ignore, the stellar growth of the past 40 years is now slowing due to demographics, greater competition and a banking/property crisis. Like all communists, they fundamentally misunderstand free markets and we should consequently anticipate ever more egregious meddling here, too.
