A hawk in a sky of doves

Global growth projections have been diminished in recent weeks as economists are considering the repercussions of trade uncertainty, the rise in geopolitical tensions as well as deteriorating economic data. With these events in mind, the International Monetary Fund cut its global growth forecast to a decade low of three per cent while Germany slashed its economic outlook for 2020. In this context, moribund macro data could affect the investors in a negative way. This difficult environment could generate pressure on business sentiment. It will force companies to keep on hold or cancel new projects. As a consequence, it could initiate a negative downside for asset prices. In order to counteract this trend, central bankers have limited options. In the past years, the best option was that of interest rate cuts combined with unconventional monetary policy also known as quantitative easing. However, many economists and central bankers have raised the question of whether accommodative policy alone is sufficient or not. They argue that fiscal measures should be implemented by governments to incentivise and support growth. In his latest statement European Central Bank president Mario...