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Commentary

Don't Expect Miracles From Central Bankers

Investors' hopes that the Fed and ECB can singlehandedly rescue the global economy might be misplaced.

Recently it seems that the world's economic hopes are in central bankers' hands. The market hangs on every word that comes from the Federal Reserve and the European Central Bank, hoping to hear some hint that another round of monetary stimulus is coming down the pike. 

This intense focus on the central banks is not entirely surprising. Given how sclerotic the political process has been in Europe and the United States, investors are turning to the semiautonomous entities to give the global economy a push. Certainly, good monetary policy is crucial to getting the economy back on more solid footing. But it alone is not sufficient. Reasonable fiscal policy and some painful corrections are needed, as well. Anyone hoping for a monetary policy miracle will likely find themselves disappointed.