Economics
Central Banks Short on Ammo Forced to Rely on Governments
- Fiscal policy now seen more vital to spur economic rebound
- Central banks could face long-term credibility questions
Lagarde, speaking to the ECB’s virtual conference Wednesday, highlighted that asset purchases along with long-term bank funding are the tools to focus on in the next wave of monetary stimulus.
Photographer: Alex Kraus/BloombergThis article is for subscribers only.
Just eight months after they swung into action to avert a crippling depression and credit crunch, central banks are in the uncomfortable position of relying on governments to power fragile economic rebounds.
The decisions their counterparts make will affect not just the growth outlook for the next few quarters, but could shape central banks’ policy options, and even their credibility, for years to come.