Central banks defiance of reality can't last forever

Yesterday's interest rate announcement by the European Central Bank didn't pull any surprises with an unchanged commitment to continue stimulus measures until it's expected expiry in March 2017 but ECB president Mario Draghi saying the central bank foresees interest rates remaining low for an extended period of time.

He also took a hardline stance on European governments implementation of structural reforms which he said were urgently needed in their respective economies but was reluctant to confirm the looseness of monetary policy was reaching it's limits and would be tightened whether or not reforms were in place, minimizing the seriousness of his tone.

We've encountered these undertones on a number of occasions involving central banks being unwilling to contemplate the thought of bringing monetary policy back into the sphere of normalisation by acting as a saviour for fiscal sluggards who fall short of finding long term solutions for their nations infected with epidemic economic discord.    

The European Central Bank has done about all it can do. https://t.co/tRIeuQS80N via @BV #ECB #Draghi

— Piotr Skolimowski (@Skolimowski) September 9, 2016

The longer we continue to see central bankers refusal to force the hand of governments to shape up, the higher the expectancy of market participants perennial thought of quantitative easing remaining indefinitely and with a greater propensity distort the overall picture.

Although the unequivocal endurance from central banks in their fidelity of the belief that more is better may show the characteristics of bravery in the face of adversity, the limitations of the market will eventually erode this might with is ever protruding flash of reality.