Analysis: Global liquidity is shrinking and that’s no bad thing

 Analysis: Global liquidity is shrinking and that’s no bad thing

Dividers are seen inside a trading post on the trading floor as preparations are made for the return to trading at the New York Stock Exchange (NYSE) in New York, U.S., May 22, 2020. REUTERS/Brendan McDermid/File Photo

After a year of record-breaking cash injections, the world’s big central banks are starting to ease off the stimulus pedal, forcing economies and financial markets to practise walking on their own again.

Not everyone is dismayed at the prospect. Since March 2020, central banks and governments have flooded markets with some $27 trillion – a third of global gross domestic product, consultancy CrossBorder Capital estimates.

Since then, world stocks have surged 85% (.MIWD00000PUS), economic growth is rebounding from last year’s pandemic-inflicted devastation, and inflation expectations are rising. Continuing to pump out cash at last year’s pace would do more harm than good, some economists argue.

Still, cheap cash remains…

Read full article…www.reuters.com