By Marc Jones
LONDON, Sept 16 (Reuters) – Emerging market central banks could risk their reputations, sovereign credit ratings and even full-blown economic crises if their bond buying is pursued beyond the coronavirus crisis, S&P Global said in a report.
Top S&P analysts said in Wednesday’s report that although there was no indication that investors had lost faith in the central banks of India, Indonesia or the Philippines, risks would rise if post-pandemic sovereign debt purchases looked likely.
“Pushed too far… the programmes may impair the ability of central banks to respond to future crises, with rating implications for the respective sovereigns,” the report said.
“If investors begin to view government reliance on central bank funding as a long-term, structural feature of the economy, these monetary authorities could lose credibility.”
S&P’s concern is also that the buying is not guided by inflation controlling objectives, but by worries a COVID-19