Central banks

What are Central Banks?

 

Central banks are entrusted with the task of controlling a nation’s inflation, interest rates and price stability; ultimately preventing the economy from failing.

 

These institutions inform and implement monetary policy, with the aim of controlling money production and distribution to better unemployment rates and economic growth. Monetary policy is primarily executed by the central banks through management of interest rates and bank reserves (deciding the amount of money banks can lend and retain at any one time). The former is hugely important as the cost of borrowing and lending money impacts loans, investment and economic strength.

 

A central bank will also act as an emergency resource for commercial banks when they need a loan - another economic safety-net for the country.

 

Central Bank News from LGIM

 

As one of the UK’s leading investment managers, LGIM offers knowledge and experience that can bring real benefit to investors looking to understand economics, policy and politics.

 

Find the latest research on future path of central bank policies around the world, from inflation control to central bank interest rates.

 

Our Asset Allocation team includes dedicated and accomplished US, European and Global economists, whose focus is to assess the macroeconomic environment across the developed world. This includes researching government policy, emerging political trends, as well as the outlook for economic growth and inflation. Our economists then work with our team of strategists and portfolio managers to translate their views into what this means at a portfolio level.

Economics

Emerging markets – is spring finally coming (in autumn)?

Following a hugely volatile summer, emerging markets rebounded in September. Is the comeback sustainable?

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Economics

The yield curve ball

The ‘yield curve’ has flattened significantly. This is worrying both investors and some Fed members given its track record of anticipating recessions. But has the yield curve become a less timely predictor in recent cycles?

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Strategy

Eureka: the Archimedes principle

Is there an Archimedes principle at play in financial markets? As central banks withdraw liquidity by shrinking their asset holdings, does it inevitably imply bad news for investors? We look to theoretical, historical and contemporary clues to find out.

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Economics

Don't shock me now

I'm not sure exactly why Queen's "Don't stop me now" has been stuck in my head...something to do with football and wishing not to get knocked out maybe...we were having such a good time! Anyway, as I say in this Sky News interview on the Ian King Show, only a big shock would stop the Bank of England from hiking in August. I also discuss the merits of the new monthly GDP data.

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