The reality is, central banks around the world are just less dependent on financial markets to drive economic stimulus. There's a couple of reasons for that.
One is the fiscal support has been so significant it really stands apart from the last cycle. Fiscal policy delivers easing directly into the economy. It doesn't need to work through asset prices.
And the second issue is one of the key reasons this recovery has been so abrupt, so compressed, is because it was a response to an almost ‘artificial’ shutdown in the first quarter of 2020, where most countries actually restricted economic activity.
There are unique circumstances this cycle in the way central banks are behaving towards inflation. Many are saying they want to tighten later. They want to see inflation actually within a target band before they start to move.
That implies when they are comfortable on the inflation story, they're going to have an end objective in mind, in terms of tightening.
The bottom line from all of this is if you're looking at volatility in risky assets (like cryptocurrency, for instance) and expecting central banks to ease up to provide markets some support, I don't think you're going to get it.
This cycle is different. Central banks are just much-less reliant on risky asset prices to help drive easing. Markets are going to have to stand on their own two feet.
Richard Yetsenga is Chief Economist at ANZ