Differing monetary policies hitting markets

The ‘Great Recession’, and the sluggish and uneven pace of recovery from it, saw the main central banks cut interest rates to record lows, as well as engage in non-standard measures of monetary policy easing, including quantitative easing.

Last summer, the ECB and Bank of England (BoE) joined the Fed in providing forward guidance that interest rates could remain at low levels for a prolonged period, despite a strengthening of economic activity.

Indeed, continuing weak economic conditions in the eurozone have seen the ECB loosen policy further over the past year. The ECB cut rates twice in 2013, reducing the refi and discount rates to 0.25% and 0% respectively.