Central banks: Change in sentiment – BBH

The US dollar has been battered this week amid a shift in global central banks sentiment seen in how the market responded to comments mostly emanating from the ECB's annual conference. 

Key Quotes

“It is not really clear that Draghi or Carney gave new policy indications.”

“The ECB President has recognized the improved growth prospects, but until inflation is on a sustainable and durable path toward, a heavy dose of monetary accommodation is still needed.  Bank of England Governor Carney indicated a week ago that it was not the time to raises the rate.  He has not changed his mind.  He identified a couple of factors he will be looking at to see if removing more accommodation is warranted (the BOE announced an increase in the cash buffer required of banks).” 

“In recent days, the Fed's leadership have added to their argument for a continued gradual increase in rates by noting rich asset prices and easier financial conditions when the Fed desires less accommodative conditions.  This is a reminder that contrary to the traditional understanding of the Fed's dual mandate, it really has three goals: Price stability, full employment, and least we forget, financial stability.”