Ominous Global Growth Warnings

IMF Managing Director Christine Lagarde had stern words for policymakers last Thursday, warning that without increased accommodation the global recovery might be at risk as low interest rates fuel asset bubbles across the globe. Her comments were somewhat conflicting as she called for looser monetary policies which have invariably stoked the asset bubbles that are discomforting to the outlook. Aside from Lagarde’s comments, the main driver of momentum in the prior week was the FOMC Meeting Minutes, further confirming the discord that exists between Federal Reserve members. The differing perspectives of voting members are making it increasingly difficult to project the path of interest rate hikes as investors seek to nail down a definitive timeline. The dollar gained during the second half of week, making great strides against major peers while commodities rose modestly in spite of renewed dollar strength. The Bank of Japan, Reserve Bank of Australia, and Bank of England confirmed the wait-and-see mentality prevailing amongst Central Banks of developed economies, opting to leave policies unchanged in a reflection of the growing uncertainty in the outlook.