The tide is turning on monetary easing
Calls for fiscal stimulus are appearing in many different places. As central banks around the world recognise that monetary policy can only do so much they look to governments for fiscal stimulus:
- RBA: wants Gov't stimulus before starting QE
- Japan: considering spending more than 10trillion yen to boost economy. Expected to push up GDP by 1.4% as reported by Justin here earlier this am.
- Germany: considering €50 billion
- ECB: Mario Draghi's final word was essentially a call for fiscal stimulus
Fiscal stimulus means the start of a new phase of growth reliant on debt sales over central bank bond buying. An increase in deficit and debt levels to support growth will put upward pressure on bond yields. Industrial and material companies stand to gain from a renewed Gov't support for infrastructure projects across the world.
