Banks cannot do ‘whatever it takes’

Central banks can’t expand loose monetary policy without exacerbating risks to world economies, the Bank for International Settlements said.

“Central banks cannot do ‘whatever it takes’ to return still-sluggish economies to strong and sustainable growth,” said Stephen Cecchetti, economic adviser and head of the monetary and economic department at the BIS in Basel, Switzerland. “Central banks cannot do more without compounding the risks they have already created.”

By putting policy rates close to zero and expanding balance sheets, central banks have given borrowers and banks time to repair their finances, though progress has been “uneven” across countries, he said.