Economists at Oxford Economics Ltd., a U.K.-based research group, say policy makers may be damping hopes that last year’s near-halving of crude prices would spark worldwide demand.

“With rates this low, even good news has a sting in the tail,” John Bulford and Gabriel Sterne, economists at Oxford, said in a report to clients last week. “The expansionary impact of the oil-price shock is dampened to some extent because of the limited capacity of central banks to loosen monetary policy.”

Oxford’s economic modelling shows the lower crude prices would historically be enough for 26 of the 29 major central banks it monitors to have cut rates by the end of this year.

Instead, just half have done so, including the Bank of Canada, which reduced its key rate to 0.75 percent in January as “insurance” against plummeting crude.

Oil would have to fall to $20 a barrel from about $50 now for the number of central banks with benchmark rates at 0.5 percent or less to rise to 78 percent, according to Oxford.

For advanced nations the reason is there’s just not that much room to cut. Of 23 rich-nation central banks, the average interest rate is just 0.5 percent, according to Oxford. Indeed, the sum of rates in those economies is 11.4 percent, lower than what the U.K.’s benchmark alone reached in the early 1990s.

One weakness of Oxford’s case is that its model does not allow for quantitative easing now being undertaken by the European Central Bank and Bank of Japan. That’s because the effects of such asset-purchases are more difficult to compute than rate cuts, according to Sterne.

Emerging Markets

Emerging-market central banks have more scope to cut, with only 18 percent of them likely to run into zero rates even if oil slides to $20, said Bulford and Sterne.

The problem for many of them is lowering rates would risk accelerating declines in their currencies.

Malaysia, Mexico, South Africa and Taiwan have all seen foreign-exchange weakness as the dollar climbed, raising concerns that depreciations would hurt balance sheets given the rise in dollar-denominated borrowing.

“The global monetary response has been relatively weak,” said Bulford and Sterne.