Cazenove's Jeffrey: Stress-testing central bankers

For the first time in many years, central banks' mettle is about to be tested. This will happen most obviously in the US and UK but also in the eurozone.

Apart from one incremental move in the US towards ending the era of exceptional monetary accommodation, now almost a year ago, central banks have not even given a nod to policy normalisation. They have preferred to pursue a course of monetary profligacy, seeming safe in the knowledge that the appropriateness of this munificence would never be tested; or, if it were, in the belief its justification would never be questioned when considered against the alternative: deflation. Liquidity injections Prior to the financial crisis, most economists, if asked what the result would be of mass...