Central bankers take on activist role to quell global economies

Central bankers have taken a decided step toward activism, moving away from a role to tamper inflation and toward one that takes into consideration the fiscal soundness of the wider, global economy.

A Bloomberg report dubs them the “whatever-it-takes” bankers who aren’t afraid to take aggressive steps to promote economic sustainability.

For investors, it means smarter strategies are needed. They face challenges forecasting what price fluctuations will come in the long-term, especially in real estate and bond markets, according to Bloomberg.

“Central bankers have begun to redefine what their role is, moving away from inflation targeting toward sustaining the health of the financial system, indeed the wider economy,” said Andrew Milligan, head of the global strategy firm, Standard Life Investments Ltd., in a Bloomberg report. “New policy makers may bring in new tools, once which global investors will need to understand quickly.”

The trend toward banking activism started in November 2011, with the appointment of Mario Draghi to head European’s Central Bank, Bloomberg reports. It’s being fueled by Bank of England’s newest addition, Canada’s Mark Carney, and a governor’s opening on the Bank of Japan, Bloomberg reported. The big question is who will fill Federal Reserve Chairman Ben Bernanke’s seat.

Bloomberg suggests the next Fed chair could be much bolder than Mr. Bernanke, rounding out the central banks’ trend toward offensive strategy.