Sometimes one comment says it all. That describes Jim O’Neill’s observation that a fair amount of levitation work awaits central bankers the world over. Timing, of course, is unknown. Meantime, there’s a few (or many) potholes on the road to economic salvation.
The chief global economist at Goldman Sachs Group in London tells Bloomberg News that “there are all kinds of risks” bubbling these days at the intersection between the price of money, inflation, economic cycles and everything else in between. Some central banks have already started hiking, if only slightly. Meantime, as the market ponders the future, there’s debate over how much of the reflation of recent vintage is engineered vs. a reflection of fundamental improvement in business and economic conditions. Perhaps it’s a mix of both. In any case, Mr. O’Neill said a mouthful when he opined that “We don’t know how much of the improvement in markets is due to central banks’ largesse, and neither do they. They’re pretty nervous, but they’ve got to get out of it at some stage.”