The changing rules of global monetary policy

The changing rules of global monetary policy

Guy Monson, chief investment officer, and Subitha Subramaniam, chief economist, at Sarasin & Partners, explain the implications the dramatic reversal in global liquidity policies could have for investors.

Until recently, relatively simple rules have governed financial markets: follow the trail of central bank liquidity and reap huge rewards; look for beneficiaries of ‘low forever’ interest rates and enjoy the carry; choose countries with the most aggressive monetary policies and benefit from stronger performance; and, above all, remember to embrace risk, and buy the dips. With central banks standing firmly behind financial markets, these rules have rewarded those investors who have simply put their money to work. Starting this summer though, several noticeable shifts seem to be underwa...