, Columnist
The 2018 Outlook for Major Central Banks
The biggest risk to asset prices and the global economy would be if the biggest institutions reduce their monetary stimulus at the same time.
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With the ongoing synchronized pick-up in global growth, systemically important central banks will likely be more willing and able in 2018 to start and, in one case continue, the normalization of monetary policy. But what is true for the central banking community as a whole is more nuanced when assessed at the level of individual institutions. Here is the outlook in ascending degrees of policy difficulty and, therefore, of the risks of policy mistakes.
The U.S. Federal Reserve is the most advanced in the policy-normalization process. It has stopped its unconventional program of security purchases, hiked rates four times and set out a plan for the gradual reduction of its balance sheet.