On Thursday 4th August Mark Carney delivered a four-pronged package of monetary stimulus to keep the global liquidity party going, after some disappointment from the Bank of Japan last week. Lower for longer remains the message and as long as it lasts then excessive credit growth in emerging markets may well continue to go unpunished.
Following a stark market response to what was an unexpected result, markets remain volatile. Political uncertainty is at record levels in the UK which impacts business investment. See my interview on Bloomberg TV's European Close show yesterday where I discuss the market impact of the Brexit vote, how imported inflation could hit consumption, and which areas of the market have been worst hit, including sterling and UK property.
Sweden's central bank, cut repurchase rates to -0.5%, but it feels like the wrong medicine. House prices are rocketing, growth is decent and unemployment is low. It feels like sawing off a patient's head to cure their migraine. We think a variable import tax would be a much simpler solution.
The game's far from over for oil producers but we're into what may well be the crucial quarter for all involved. US producers are suffering from lower prices but right now the supply shock story has moved east, with Iran, Saudi Arabia and Kuwait set to make the running over the next few months.