Tangle of data puts policymaking on pause
By Andy Bruce
LONDON (Reuters) - Financial markets have become convinced in the past two weeks that two years of one-way traffic from the developed world's central banks on policy is coming to an end.
The difficulty, on the evidence of the last few days, is the mass of conflicting signals on how shaky things still are, or how much better they will get - and as a result getting from here to actual changes in policy will probably take months.
Since the euro zone's sovereign debt crisis administered another jolt to the global economy three years ago, central bank decisions on more monetary easing have not so much been a question of if, but when. The same has largely gone for a fragile U.S. recovery.
That's not the case in 2013, even if global growth looks likely to disappoint again this year.
Faced with fewer immediate threats but still under pressure to nurse the world economy back to more convincing health, central bankers have been grasping at a disparate and volatile set of economic indicators for a steer on policy.
"That's a fairly difficult challenge at the best of times, and we're hardly in the best of times," said Craig Wright, chief economist at Royal Bank of Canada in Toronto.
Data from the United States last week summed up the problem.
Depending on the indicator, there was a case for the Federal Reserve maintaining support for the economy by pressing on with its $85 billion-a-month bond purchase program for a long time, or scaling it back soon. Continued...