The world’s central bankers could be forgiven for thinking that things are never going to get back to normal. More than six years after the financial crisis plunged the world into recession, monetary policy looks nothing like it did before those events.

Even as economists predict that the U.S. Federal Reserve and Bank of England will finally begin to raise benchmark rates in 2015, the central banks are unlikely to push borrowing costs anywhere near pre-crisis, inflation-fighting levels. And even though the Fed in October ended the bond-buying campaign it undertook when the U.S. economy was weaker, it isn’t shedding the assets it bought. The European Central Bank and Bank of Japan, for their part, are stepping up purchases.

Central bankers know that global growth is shaky, that debt is rising and that they’re getting little help from government fiscal policies, Bloomberg Markets magazine will report in its January issue. Economic progress will again depend on the monetary spigot in the coming year -- as will stock prices, bond yields, commodities demand and currency rates.

“Given the slow and unsteady nature of the recovery, supportive policy remains necessary,” Fed Chair Janet Yellen said on Nov. 7 at a conference of central bankers in Paris. Monetary officials should keep trying extraordinary measures, Yellen argued, especially because fiscal policy today remains “somewhat contractionary.”

David Fuller's view

Severe credit crisis recessions are very deflationary and take a long time to recover from, as I have often said before.  A credit crisis forces corporations and the public to deleverage, which lowers their respective governments’ tax receipts, curtailing government spending.  Banks, adversely affected by bad debts, are reluctant to lend, which further slows the recovery. 

A unique factor in this cycle, but one that we are certain to see in future, is that an accelerated rate of technological innovation is also deflationary.  Smart machines replace people faster than they can find new jobs, and limit salary increases for many who are employed.  Of course there is a small minority who make vast fortunes, but they are atypical relative to what is happening in the broader economies. 

A form of rescue for economies in this environment comes from monetary accommodation provided by their respective central banks.

Who or what does best in this environment? 

Well managed multinational corporations, which I have long described as Autonomies.  They can afford the best technology and the smartest, most creative and hard working people.  They can borrow cheaply, develop their goods and services in the most advantageous regions, and sell in the strongest markets.  Unlike governments, they do not have to subsidise the poor or repair national infrastructure.  They are operating in a sweet spot. 

You and your families may understandably feel that you are under pressure in this environment.  However, you are best served during periods of lengthy monetary accommodation by stock markets.  They can be volatile because they are traded by people.  However, a buy-low-sell-high medium to longer-term policy, favouring competitively valued shares, can be extremely rewarding.  Many of these companies will also provide yields in excess of interest rates in countries where monetary accommodation is occurring.  This favourable environment for investors could easily persist for several more years.