Markets: All eyes on politicians - ANZ

Research Team at ANZ, suggests that while financial markets might be starting to look for new drivers, politicians and policymakers are now very much in the driver’s seat.

Key Quotes

“Financial markets are going to have to get used to decisions and policies taking longer to be negotiated and finalised compared with central banks. A great example of this is the supposed oil production cuts from OPEC and some others, which has now been talked about for some months but has yet to materialise. That’s just the nature of government and global policy making. The outcomes can often be more opaque too, with a difference between agreed policy and actual real world outcomes. This means a sense of patience and pragmatism needs to be applied.”

“This was highlighted recently by both the ECB and FOMC saying they need to see what actual US fiscal policies are before assessing the impact on interest rate profiles. It’s the same in the UK too. The BoE’s Gertjan Vlieghe said overnight that inflation at 0.5% above the BoE’s 2% target “is not the limit”, suggesting that the BoE will look through the GBP’s first round inflation impacts and also wait to assess what other Brexit impacts are too. This includes the effects on the labour market, terms of trade, migration, and foreign direct investment to name but a few.”