T. Rowe Price: Do not underestimate central banks' power

Recession due but will be relatively mild

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T. Rowe Price's Nikolaj Schmidt
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T. Rowe Price's Nikolaj Schmidt

A recession is likely three years off but will be less severe than those in 2008 and 2001, according to T. Rowe Price's chief international economist.

Bucking consensus views that central bank rate cuts are no longer effective in stimulating global growth, Nikolaj Schmidt said while the central banks may have less room to manoeuvre, they were not "impotent". Schmidt explained that for more than ten years, global growth has been supressed by widespread deleveraging, witnessed in the wake of the global financial crisis, eurozone crisis, taper tantrum and current wave of Chinese deleveraging, and the world has not seen any significant "releveraging" of the real economy to counter it all. Powerful headwinds Further, factors such as Br...

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