2020 Monetary Policy Outlook

01 mins 31 secs

Please login to access your playlists.
Share a link to this video

2020 monetary policy outlook Edward Al-Hussainy, Senior Interest Rate and Currency Analyst

We are looking at a substantial probability that rates go back to zero.

In terms of monetary policy we've gone through a substantial change and some substantial reorientation versus where we were last year. We were in a hiking cycle, were in the process of shrinking the Fed's balance sheet. We're now in the process of cutting rates and expanding the Fed's balance sheet. And looking at 2020, the likelihood is quite strong that we'll continue that easing into 2020 as risks to growth continue to stay on the table.

Collectively global developed markets have very limited policy space right now, from a conventional perspective, to respond to downside risks, and if those risks materialize in 2020, there's a strong probability that they do, we will have to rely on much more unconventional measures -- quantitative easing -- for guidance.

Fiscal policy is not complimenting what monetary policy is trying to do. And so, we've handicapped ourselves and right now, the margin of safety is quite slim, and the odds of an accident happening have increased substantially relative to where we were, say, even a year ago.

And so, as we go into 2020 we are handicapped from a policy perspective. And, I think, again, that's not a great place to be.

The views expressed are as of October 2019, may change as market or other conditions change and may differ from views expressed by other Columbia Management Investment Advisers, LLC (CMIA) associates or affiliates. Actual investments or investment decisions made by CMIA and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Since economic and market conditions change frequently, there can be no assurance that the trends described here will continue or that any forecasts are accurate.

Investment products are not federally or FDIC-insured, deposits or obligations of or guaranteed by any financial institution and involve risks, including possible loss of principal and fluctuation in value.

Securities products offered through Columbia Management Investment Distributors, Inc., member FINRA. Advisory services provided by Columbia Management Investment Advisers, LLC.

Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies.

©2020 Columbia Management Investment Advisers, LLC. All rights reserved. 2836475


There’s a high likelihood that the Fed continues easing in 2020, given risks to growth.

Company Information

Contact your Columbia Threadneedle Investments representative at 800.426.3750