More than a year on from the collapse in commodity prices we can see how quickly the global growth prospects of energy exporting countries – in this Australia and Canada – have been affected. We’re not witnessing any restriction in oil and gas supply or any sustained pick-up in demand or pricing – and, given the US’s newfound status as a global non-OPEC producer, nor do we expect to see any concerted action on tackling chronic levels of oversupply. Typically with commodities you see significant overinvestment followed by swift declines in pricing due to overcapacity. It’s a cycle that can last several years to play out and we’re really only at the start.
The reality for 2016 is likely to be a divergent world with different rates of growth and hence a variety of approaches to interest-rate policy. We believe developed economies will continue to expand into 2016 although at different and, on average, moderate rates. It is certainly unlikely to be an environment in which growth picks up to a point where major central banks across the globe will drastically withdraw from their accommodative monetary policy regimes.
Vassilis Dagioglu – Mellon Capital, a BNY Mellon company