“Central bankers claim that they aren’t starting a currency war,” wrote market expert Ed Yardeni. “They deny that their policies are aimed at the competitive devaluation of their currencies. Let’s call it competitive ultra-easing.”
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As countries try to weaken their currencies to boost exports, the risk of a currency war similar to events seen in the 1930s has heightened and policymakers are making sure they are on the winning side, according to Morgan Stanley.
The balance of power now rests with Japan, according to the bank, as Japan’s policy-makers’ more dovish approach looks set to bring the world a step closer to a currency war.
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High household debt is stretching the Bank of Canada’s low interest rate strategy to the limit, Senior Deputy Governor Tiff Macklem said on Thursday, hinting that the central bank will retain its bias toward higher interest rates.
Macklem, considered the strongest candidate to be the next governor of the central bank after Mark Carney leaves later this year, said keeping rates low for the longest period since the early 1950s was the right thing to do during the global financial crisis and in its aftermath.
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