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Are Central Banks Facing a ‘Whatever It Takes’ Moment?


Mar. 7 2019, Published 12:55 p.m. ET

Central banks

Today, the European Central Bank or ECB said, “The Governing Council now expects the key ECB interest rates to remain at their present levels at least through the end of 2019.” The current language is more dovish than last year, when the ECB said rates would be on hold “at least through the summer of 2019.”

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ECB rate decision

The ECB is not alone in going slow on rate hikes. The US Federal Reserve has also taken a somewhat dovish approach after raising rates four times last year, which President Donald Trump dislikes. India’s central bank has also gone slow on hikes.

Growth worries have spooked markets globally. Almost every major economy is expected to grow at a slower pace this year compared to 2018. The ECB lowered its 2019 growth forecast to 1.1% with President Mario Draghi seeing “sizable moderation in economic expansion that will extend into the current year.”

Earlier this month, China also lowered its 2019 growth forecast.

Mario Draghi

In 2012, Draghi famously said, “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” Based on the dovish tones from central banks globally, I feel they’re trying to do whatever they can to arrest the growth slowdown and keep recession fears at bay.

Meanwhile, markets (SPY) are still in the green this year with all the FAANG names—Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Alphabet (GOOG) trading with year-to-date gains. General Electric (GE), Boeing (BA), NVIDIA (NVDA), Advanced Micro Devices (AMD), and Microsoft (MSFT) have risen 25.2%, 14.0%, 21.4%, 32,3%, and 10.5%, respectively, based on their closing prices on March 6.


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