Central banks will trigger next financial crisis

Baku. 19 February. REPORT.AZ/ The world's leading central banks prepared grounds for the next crisis.

Report informs citing the Vestifinance.ru, the European Central Bank (ECB), the Fed, Central Banks of England, Japan, Canada and other countries warn about the curtailment of the monetary stimulus program and further increases in interest rates.

ECB officials hint at the end of monetary stimulus program by September this year, and discount rate hike by December.The Bank of England has already launched its program on increasing rates, the Bank of Canada continues to raise interest rates. Bank of Japan said it will reduce monetary stimulus program.

US economist Brandon Smith noted in his article that Fed has taken the most serious steps in monetary policy. Fed initially stopped monetary stimulation, began to lower its balance, and continued to increase its discount rate. Fed inflated its balance to 4.5 trillion dollars in just 8 years, which contributed to the recovery from the crisis of 2008-2009. As a result, US financial assets rose sharply. Former Fed chairperson Janet Yellen, after leaving the post, said: "The price/earnings ratio is near the historic high for US companies. Is it a "bubble" or just too high prices? Hard to tell. And yet such high asset prices can't help but worry”.

Notably, US President Donald Trump recently announced an infrastructure plan of $ 1.5 trillion. White House officials have pointed out that this step will accelerate the discount rate hike. This step also indicates that monetar stimulation cannot continue. So, the US government needs financial resources. Considering the US budget deficit and size of the foreign trade deficit, Fed does not seem to be able to help the stock markets any further. 

This will lead to a financial crisis if the stock market starts selling.