FXStreet (Guatemala) - Gustavo Reis, Global Economist at Bank of America Merrill Lynch explained that The Federal Reserve and the Bank of England are heading to the exits.
"The Federal Reserve and the Bank of England are heading to the exits, eyeing interest rate hikes in the not-too-distant future. And while the BoE seems closer to rates liftoff than the Fed-a reflection of the sustained growth pickup in the UK over the past year-the ongoing strengthening in the US economy suggests the Fed will soon face similar challenges."
"To be sure, there are limits to central banking analogies. Policy outlooks in the US and the UK reflect different economic structures, shocks and reaction functions. There are common themes, however, in the latter two categories."
"On the shocks front, both the US and UK economies are still recovering from financial crises and a productivity slowdown. These shocks increased the uncertainty about the supply side and the associated degree of slack."
"Meanwhile, both central banks have been struggling to communicate their post-crisis reaction functions, particularly with regard to financial stability. The riddles are not the same, but there is much to elicit empathy from both sides of the Atlantic."