Weekly Economic Briefing

Loosen up

26 May 2015

Global Overview

  • Most of the world’s major central banks have either formally or informally loosened policy in response to weak inflation and disappointing activity data.
  • Janet Yellen is the most important voice on the FOMC. In a recent speech she signalled a preference to begin raising rates this year but follow-through will depend on recent data disappointments proving transitory.
  • The ECB potentially faces a challenging few months; the recovery in the Eurozone is promising but Grexit poses a downside risk. Existing policy tools should contain most of the negative effects if Grexit were to happen.
  • The Bank of England is treading lightly, waiting for inflation to rebound before making any definitive moves. As capacity becomes extinguished, policymakers will face more difficult questions.
  • Japan’s QQE programme has not had the effect policymakers were hoping for and further stimulus seems the only option to hit the inflation target. Meanwhile, China faces the unenviable task of rebalancing the economy without delivering a hard landing.


Janet Yellen’s opinion is the most important voice on US monetary policy; her comments last week suggest cautious optimism about the growth and inflation outlook.



The latest Quarterly Inflation Report caused barely a blip in markets as the Bank of England does not want to rock the boat at present. However, more difficult decisions lie ahead.



The ECB remains committed to its stimulus programme, despite signs of recovery in Europe. Progress in Greece remains painfully slow. If the worst were to happen the ECB would fight contagion.



QQE has not worked as well as the Bank of Japan may have hoped. Further easing is likely, though the benefits are less clear.


Emerging Markets

China responded to weak first quarter data with aggressive monetary and fiscal easing. Policies will support growth but the balancing act between growth and reform will become increasingly difficult.


Standard Life Investments’ Global Strategy team provide regular analysis of the key economic data that has been influencing financial markets.

Available on a weekly basis, the Weekly Economic Briefing takes a detailed look at the global economic issues that have been impacting our investment strategy. The regional approach aims to provide an easy-to-navigate guide to the most recent developments in the global economy.

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