Central banks rush to cut rates, but China stands firm

New Thinking

Huefner predicted the central banks in advanced economies would also maintain rates for the foreseeable future as lower interest rates couldn't solve all the problems.

"In terms of rates, the outlook is stable, but central banks will become more innovative. There's a period where central banks have reached their limit," Huefner said.

"You lower interest rates and lending to small companies does not pick up," he said of the Bank of England's Funding for Lending Scheme, launched last July to boost lending to the real economy.

"That requires new thinking, new instruments. The ECB is now thinking of supporting small and medium sized enterprises lending. So options and changes in this respect we think could be forthcoming," Huefner argued.

"It's not traditional interest rate lowering. It's not traditional quantitative easing. It's something more targeted," he said.

ECB president Mario Draghi recently said the ECB was considering buying asset-backed securities among possible options to support lending to SMEs, which was critical to bring unemployment down in the eurozone.