Economic Update September 2016
Summary
More stimulus for the UK, Europe and Japan
Recent months have brought further monetary policy stimulus in Japan and the UK, and the European Central Bank (ECB) is also favoured to continue to add to monetary policy accommodation over the course of this year.
With interest rates already negative, the Bank of Japan (BoJ) and the ECB are pushing further into unconventional quantitative measures in an effort to support growth and reinvigorate inflation. This is occurring even as the effectiveness of ever
looser monetary policy, zero and negative interest rates and unconventional policy settings are increasingly being questioned.
The Bank of England (BoE) has its own unique set of problems. This is due to the ‘Brexit’ vote that will see the UK leave the European Union. Before the vote on 23 June, the BoE had been favoured as the second major global central
bank to begin to remove policy stimulus, after the US. It has now been forced to reverse course. At the same time a heightened degree of uncertainty is impeding economic activity and politicians are now scrambling to come to an agreement on
a way forward.
UK: Policy uncertainty
The post-Brexit environment will remain challenging

Source: IFM Investors, www.PolicyUncertainty.com
For economic policymakers, the task is to attempt to reduce the impact on the economy, which is now broadly expected to enter recession. In August, the BoE cut rates 25 bps to just 0.25% and increased its government bond buying program from £375bn
to £435bn. It also committed to start purchasing corporate bonds. Monetary conditions more broadly have eased as the GBP continues to trade around 11.0% lower than before the Brexit vote.
About the author
Chief Economist
Alex Joiner, PhD
Joined in 2016
Bachelor of Economics (Hons) (Latrobe University), PhD (Econometrics) (Monash University).
Alex is IFM Investors’ Chief Economist and has more than a decade of experience in the field. He is responsible for the firm’s economic, financial market and policy analysis and forecasting. Alex is also a member of the firm’s Investment Committee. Prior to joining IFM Investors, Alex was the Australian Chief Economist for Bank of America Merrill Lynch. In this role, Alex was responsible for providing economic insight and forecasts across asset classes and conveying these views to both domestic and global investors. Alex was also previously a Senior Economist at the ANZ Bank.