Central banks want the world to carry on as they quietly tighten

WASHINGTON/FRANKFURT (Dec 15): Central bankers are gingerly trying to take away the punch bowl without interrupting the party.

Led by interest-rate increases by the Federal Reserve and the People’s Bank of China, central banks around the world shifted toward a tighter monetary stance this week. Yet the moves were either so well-telegraphed, or so tiny, and the language about future action so hedged, that there was barely a ripple in financial markets.

“They’re terrified of upsetting the markets,” said Paul Mortimer-Lee, chief market economist at BNP Paribas. So “they’re all exiting quite slowly from emergency settings” on monetary policy.

---

Related Stories

• US risk-free rebounds on strong jobs report, HSI, HSTECH may start to consolidate gains
• A stronger currency should come from gains in relative competitiveness, not higher interest rate differentials
• Singapore core inflation unchanged on stable energy, food costs

---