Submitted by Taps Coogan on the 8th of August 2019 to The Sounding Line.

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The following map details the changes to central bank interest rates and bank reserve ratios around the world as of August 7, 2019, based on data from Central Bank News.

So far this year, 42 central banks around the world have cut their benchmark interest rates, cut bank reserve requirements, or cut both. This includes major economies such as the US, China, India, Russia, Brazil, South Korea, and Australia. The ECB is widely expected to cut interest rates in September. Just six countries have raised rates, with Norway and Pakistan being the most notable economies to do so. No countries have raised bank reserve ratios this year.

The exact trajectory of Fed interest rate policy has become something of an obsession for US market participants. There is great consternation about whether or not the Fed is acting quickly enough to stem the slowdown in the global economy. While that is a highly relevant concern as it relates to near term market trends, it may be missing the forest for the trees.

The world has already commenced a major easing cycle. Dozens of countries have already acted. As each country takes its turn cutting rates and pushing down its currency, other countries become obliged to do the same thing lest their policy become too tight on a relative basis. If the Fed drags its feet, they will simply have to enact more stimulus later to make up for the damage.

Monetary policy is the only tool in the global economic tool chest that has any realistic chance of being deployed to halt the ongoing slowdown. Central banks have promised to do whatever it takes to forestall the inevitable. The wave of liquidity is already forming and, unless you think that even lower rates are actually going to fix the economy’s underlying problems, there is little that is going to stop the wave from continuing to build. We are already hearing murmurings of a restart to QE.

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