This article is pretty easy to summarize. Central Banks are winging it now with no idea how what they do might impact anyone else. The article says to expect "more surprises." The article is not very favorable towards individual central banks. A trend we noted in an earlier blog post here. If we get another big financial crisis, who you gonna blame? The "uncoordinated actions" of individual national central banks? How might we solve this problem? Coordinate things at the IMF? We'll see.
"Central banks are now open all hours. Just as they worked weekends through the financial crisis, policy makers are again signaling they can strike at any time for the good of their economies."
"Spooked by the threat of deflation, Sweden’s Riksbank became the latest to put investors on alert when it said on Thursday that it’s “prepared to do more at short notice” after cutting its main interest rate below zero and unexpectedly saying it will buy government bonds."
. . . .
"The ad-hoc actions undermine the traditional preference of central banks to be predictable and transparent. Indeed, a post-crisis trend has been to use forward guidance as a policy tool in signaling intentions. The theory goes that if investors can easily forecast the short-term interest rates of central banks, then that will influence long-term borrowing costs too. Financial markets should also be less volatile if policy can be forecast."
"So why the switch? One reason is that policy makers are increasingly willing to move when incoming data or market moves challenge their previous outlook, demanding a quick response."
(editors note: does this fill you with confidence that central banks have a good handle on things?)
. . . . .
“Certain big central banks are making moves, leaving a lot of others having to respond on the fly to the implications of those moves,” said Carnell. “They have to keep a step ahead and we’ve seen that on a number of occasions. There will probably be more surprises.”