FXstreet.com (Barcelona) - Central banks implementing quantitative easing programmes also face high thresholds to action, according to Trevor Greetham, Head of Asset Allocation at Fidelity. "In the old days they could cut interest rates by a quarter of a percentage point as a precautionary measure if growth appeared weak in the full knowledge that such a move could be easily reversed," he explained, "However, QE is necessarily being administered in enormous programmes lasting six or more months. Unfortunately, the additional proof of weakness that is required to take such large scale action only adds to the sense of crisis."

Greetham also explained that in each of the last few short economic cycles we have needed to see a deep sense of panic before policy makers have been jolted into action. So far though, he would say that we've seen "their second best shots." Fidelity's Head of Asset Allocation noted that with the bank's market sentiment indicator in neutral territory, "things may have to get worse before we get additional and potentially cycle-turning policy action."

"Thinking longer term, this rapid boom-bust environment poses serious challenges for investors," he said, "diversification across asset classes is more important than ever and the asset mix should include safe-haven or uncorrelated investments like high quality sovereign bonds and gold."

"A wide dispersion of returns offers fertile ground for tactical strategies but it is important that decisions extend beyond what has become a binary call on risk," Greetham concluded.