Fund manager of the St. James’s Place Strategic Income Fund, Chris Bowie of TwentyFour Asset Management has commented on the Bank of England’s largest stimulus package since the financial crisis.
“The combination [of measures] should give the real economy the breathing room and stimulus it needs to help ensure we do not see two [consecutive] quarters of negative growth in 2017 or 2018 – but of course nothing is guaranteed,” he says. “This [package] is more than we expected and it is very positive for all GBP [sterling] credit assets.”
Andrew Humphries, communications director at St. James's Place, comments that the extent of BoE policy measures also highlights a growing concern among economists and politicians who are calling for governments to take greater action to boost growth through fiscal stimulus and public investment as central banks are being forced to shoulder too much of the burden when it comes to stimulating growth.
He writes: “The Japanese government seems to have been listening to such advice and approved a USD45 billion financial stimulus package, which will see welfare, infrastructure and SMEs primarily benefit as the government seeks to support recent central bank action with stimulus of its own as part of the ‘Abenomics’ economic programme. Yet the scale of the package disappointed many investors, and the Nikkei 225 ended the week down 1.9 per cent.”
He concludes: “Despite another troubling week for European bank stocks, new economic data for the eurozone pointed to continued growth, showing a jump to 53.2 and suggesting that the single currency area is continuing to grow even as the equivalent reading tells a very different tale in the UK.”