UPDATE: FED DISTRICT BANKS SEE ‘ESCALATING THREATS’ TO PAYMENT SYSTEM!!!$1 Trillion In US Bank Deposits Held Abroad Will No Longer Be Insured!
September 10th, 2013
Morgan Stanley says many of its clients are preparing for an imminent loss of central bank control
The Federal Reserve is contemplating unwinding its quantitative easing program, which at $85 billion in bond buying per month has constituted the single largest provision of marginal liquidity to global financial markets since this latest iteration of the stimulus program was launched in September 2012.
And while the Fed is in the spotlight, it’s not the only central bank that is trying to lean more heavily on forward guidance these days – these “open-mouth operations” are currently all the rage at the Bank of England, the European Central Bank, and the Bank of Japan as well.
However, investors don’t think central banks will be successful with these new forward guidance tactics, which are expected to ramp up soon.
“Most clients I met buy our story that the Fed, the Bank of England and the ECB will step up their efforts to push back on expectations of earlier and faster rate hikes in the next few weeks and months,” says Morgan Stanley global head of economics Joachim Fels in a Sunday note. “However, many doubt that Bernanke, Carney, Draghi & Co will be successful in their forward guidance efforts in the face of further improvements in the economic data.”
In other words, despite continued efforts by central banks to keep interest rates low, improving economic conditions will force interest rates up.