Central banks (CB) across advanced world appear to have run out of steam, however, Jeremy Stretch, Head of G10 FX for CIBC, believes they are always looking out for different type of shells to load into their bazooka and thus talks of ‘helicopter money’ are gaining pace. Stretch said CBs primary mandate is inflation, which is still moribund, hence CBs are forced to think about additional tools.
While talking about the volatility in pound, Stretch said the real money (long run investors) lack desire to put money into sterling assets ahead of June 23 referendum. When asked whether Brexit is to blame for all the problems, Stretch said uncertainty does keep consumers away from big ticket purchases, but added that recent economic data in the UK has not been encouraging.
Stretch concluded by saying a bounce back in economy and GBP could be seen in H2 if the “remain vote” scores a victory at the June 23 referendum.