External Vigilance Essential for Central Banks
In contrast to last week, escalation on the geopolitical front is now harder to ignore. Although the issues at hand may not lead to broad-based risk aversion alone, markets already have plenty of other reasons to position for more caution, such as sluggish US and Chinese data, ongoing EM adjustments and general valuation concerns. For the ECB and BoE who this week, despite facing ongoing questions over their credibility on domestic needs, their more immediate focus may now turn to external risks.
Read the full report: UBS