Global economic party not over yet
Ben Bernanke of the US, Mervyn King of the UK and fellow central bankers may go on filling up the world economy's punch bowl this year, even at the risk of an inflationary hangover.
Signs that the party is ending for global growth are keeping monetary policy leaning in the same direction at major central banks, with those in the UK and Canada likely to join Bernanke's Federal Reserve in cutting interest rates again. The same conditions may lead the European Central Bank (ECB) and the Bank of Japan, which shelved plans for raising rates, to remain on hold for months.
"I expect 2008 to mark the beginning of another global liquidity cycle," says Joachim Fels, Morgan Stanley's London-based co-chief economist. "More signs of slowdown or even recession are likely to swing the balance towards more aggressive monetary easing in the advanced economies."
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