Leaviss: Why regime change at the central banks matters

ON BONDS

We believe the regime change at central banks will be one of the key issues for fixed interest investors in the coming years.

This is because the regime change boils down to a significant shift in central banks’ priorities: from now on, central banks will overlook above-target inflation and instead focus their energy on cutting unemployment and debt. Of course not many policymakers are willing to say this aloud because admitting you do not care about inflation anymore tends to put a damper on the government bond markets. One of the few central bankers to publicly acknowledge the current trend away from inflation targeting is Charles Evans, the president of the Federal Reserve in Chicago. Evans thinks bringing d...