Japan and Britain Are Entangled
Pushed by the release of weak economic situation of liquidity “critical point” even greater than the United States, as usual allies, Japan and the United Kingdom this time standing on the American side.
October 19, the Japanese government insisted the 20 months reduced their economic report. The status of the Japanese economy from the “recovery” raised “at this stage at a standstill.” The important influence economic growth in Japan’s export industry is also expected to be from “the slowdown at this stage” to “at this stage appears to weaken.” In just the first reboot after a week of quantitative easing, 13, Bank of Japan Masaaki Shirakawa line suggests that if economic and financial situation deteriorated, the bank could finance expansion of its 5 trillion yen purchase program size. However, the reality Masaaki Shirakawa left to chance but may be limited. Bank of Japan in September of M2 and M3 money supply grew by 2.8% year on year and 2.1%, generalized flow increased 2.1% year on year, showing a flood of liquidity situation, but this impact, the 10-year Japanese government bond yields are approaching 7 year low. “Once the Fed starts policy of quantitative easing, it is easy for the Bank of Japan into a dilemma, continue to follow up loose will face the risk of national bankruptcy credit, if you stop to follow up, the yen surged against the dollar to the Japanese economy will spiral into a deeper . “Naoki Iizuka, senior economist at Mizuho Securities, said.
Entangled in it than the Bank of Japan will be carried out in the end of quantitative easing is more complicated, the Bank of England’s monetary policy into a three game situations. Interest rates, expanding the current quantitative easing policy unchanged and maintain the Bank of England became the focus of debate.
20, Bank of England minutes released in October show that England’s Monetary Policy Committee to maintain the 8:1 200 billion pounds through a bond to buy the same size, only the members of Simpson requested that the scale expanded to 250 billion pounds; MPC also to 8:1 by the interest rates unchanged, members Sentai Si 5 times require increase the benchmark interest rate to 0.75%. Bank of England said that in view of the needs of the members is inconsistent outlook, the central bank will leverage October inflation report for further analysis. To determine the current Bank of England’s inflation target of 2% in September UK inflation rate was 3.1%, the 7th consecutive month above the central bank targets. British Prime Minister Cameron is more inclined to stimulate the British economy through monetary policy. “I am a conservative fiscal policy, monetary policy, but is a radicalism.” Cameron said.
Tighten the emerging economies, “Valve”
No matter how developed the ultimate decision-making, close to quantitative easing “critical value” of the status quo or to let the market felt the pressure. 20, in the huge liquidity, surrounded by the dollar index is expected to drop 77.06 again. “Quantitative easing, the market has become a curse, once the magic spell is applied, the dollar index will face greater volatility.” Fitch Ratings director of the Asia-Pacific sovereign credit width of Andrew Lu Keen said.
Decline in the dollar has been inspired all associated with non-US currencies rose across the board, which falls at the dawn of the first to be recovery of emerging economies has become a “disastrous.” Beginning last year, the Brazilian real and South African rand against the dollar has risen by 37% and 36% in Asia, the Thai baht and Malaysian ringgit also rose 10%, won more than 7.6% rise, the Indian rupee a months rose to nearly 5%. Good economic prospects and attractive exchange differences will flow into emerging markets, profit-driven battlefield. Bank of America – Merrill Lynch survey of 283 fund managers found that 49% of them are heavily loaded with emerging market stocks, the share reached its highest level since 2009, only 3% of the people Shigekura European stocks. Almost all of the respondents are in the United States and Japan to lighten up the stock. “Hot money” over-enthusiasm for emerging markets, showing that they are almost at the same time tightened the hot money into the “valve.”
19, the Chinese central bank in nearly three years after the reset interest rate instruments, the bank one-year deposit and lending rates by 0.25%. A day earlier, the Brazilian government announced that the fixed income securities of foreign investment tax from 4% to 6%, which is again within 14 days, the Brazilian government raised the tax. The Thai government has announced will be in the form of withholding tax on foreign investment in bond yields tax of 15%. Repeatedly intervened in the foreign exchange market after the Bank of Korea issued a warning that if the excessive growth of foreign capital, the bank will be possible to limit foreign currency borrowings. Acts of the Government of Indonesia are strong foreign investment provided less than 3 months duration. “Capital controls during the integration in the global economy means the most to be blamed, and perhaps now the emerging economies has become the only self-defense weapon.” Societe Generale in London, emerging market strategist Gaelle Blanchard said, “but if you can not prevent a weaker dollar, any resistance is temporary. ”
G20 summit in London, the important task of the global economic recovery, emerging economies, assumed the amount of days of liquidity shocks. G20 summit in Seoul soon, the face of yet another quantitative easing, emerging economies seemed to have chosen in their favor.
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