Are the world's major central banks, as Reuters says, already stretching the limits of monetary policy, while pressure has risen for them not go any further or even to begin pulling back? According to Reuters, top officials have had to rely increasingly on speeches - not always successfully - to convey to financial markets how they intend to manage their economies.
As long as their economies are in a recovery mode, policymakers may have to rely on providing verbal guidance to markets rather than more "extraordinary" measures such as bond purchases, loans to banks to boost liquidity, or effective monetization. But investors are already getting the message, i.e., pulling back from bullish bets, as investors are not so sure that growth is yet sustainable, particularly enough to drive commodity prices. Basically, all risk assets have risen mainly on the excess liquidity push, and could very well decline when they are deprived of this safety net of abundant liquidity while economies are still anemic.
In fact the big pop from money expansion has already passed in the U.S., with the YoY growth in the monetary base already double dipping from the massive increase at the height of the 2008 global financial crisis.
Bloomberg: hedge funds cut wagers as fed signals less stimulus