Investors around the world are looking to central banks in the quest to see if inflation needs to tackled after the emphasis has been on jobs and creating the best conditions to have more jobs. If one consumer buys items, then it is good but if many consumers are opening their wallets to spend money, then central banks worry about inflation.
In an article by Terje Solsvik and Victoria Klesty of Reuters, the Central Bank of Norwary gave notice it expects to raise interest rates 4 times by mid 2022 (next year) as the economy shakes off the effects of COVID-19. The Norway Central Bank is called the Norges Bank and Governor Oeystein Olsen said expects to raise rates by a quarter every 3 months.
The Swiss National Bank signalled monetary policy would stay ultraloose for the foreseeable future.
In Norway, growth is expected to be 4.1% up from 3.4% and inflation was slowing from 3% to 1.7% below the goal of 2%.
The finance ministry would raise capital requirement held by the banks termed supplementary buffer capital 1.5% of the balance sheet up from 1%.
Linking to dividend paying stocks, all central banks in the developed countries have been using the tools in their toolbelts to maintain their economies. As people are vaccinated and people can gather allowing more industries to open up, the central bank is trying to lessen their role in the economy. It is a hard balancing act but investors always look to seeing when measures are too harsh or restrictive. If too harsh and inflation runs up, then alternatives to investing open up. If too restrictive the tools may not work for many of its citizens.
There are more questions than answers, till the next time – to raising questions.