Kit Juckes, top currency strategist at Societe Generale, reckons that the market turmoil has been sparked by a loss of faith in central bankers.
In a new note to clients, he writes:
We’ve relied on central bankers to fix all the world’s woes, when all they could really do was to get the global financial system back on an even keel. Keeping policy too easy for too long and boosting asset markets in the vain hope that this would deliver a sustainable demand pick-up has meant that even a timid attempt at normalising Fed policy has caused two months of mayhem. Now, a growing realisation that central banks’ powers are waning has prompted a rush into safe havens.
And, of course, years of ultra-loose monetary policy have also led us to this point:
We’re just getting the stickers saying ‘Easy Money may cause harmful side-effects if consumed persistently for long periods’ printed….