Monetary Policy and Geopolitical Risks

September 16, 2019

Monetary Policy and Geopolitical Risks Photo

Last week, in hopes of jump-starting a sputtering economy, the European Central Bank made the controversial decision to make interest rates more negative and resume quantitative easing. This week, monetary policy makers in the U.S., Japan, Switzerland and England face the same decision. The expectation is for more stimulus, but the question is how effective will that tactic be? Markets are priced for continued easing of monetary policy, spurring economic growth as a result. 

On the geopolitical front, the attack on Saudi Arabia’s oil infrastructure this weekend pushed oil prices higher by approximately 10%. The increased risk caused by this event has the potential to pressure markets globally. 

Consequently, I expect a return to volatility that has largely fallen since the beginning of September.

Tags: Oil | Volatility | European Central Bank | Interest Rates | Monetary policy

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