What is going on with global monetary policy?

Although it has been a quiet week for New Zealand economic data, the global economy has remained far from quiet.  Concerns about China, slumping commodity prices, and low global inflation have led to rising calls for monetary policy stimulus around the world – with some analysts going as far as suggesting the US Federal Reserve should reverse its December hike in interest rates and consider more quantitative easing.  However, we suspect that analysts are misdiagnosing the issue at the heart of the current global slowdown – an issue that additional monetary policy easing is unlikely to solve.