Federal Reserve Chairman Ben Bernanke hinted that it might start the third time quantitative monetary policy, there are signs that the EU is also secretly follow-up. United States and Europe to “loose”, but in emerging market countries, “tighten.” The spread of the expansion of hot money in China in 2011, the pressure may be greater than this year. There are heating up inflation expectations, outside eyeing hot money, which will test the wisdom of monetary policy makers.

U.S. and European economies cool

United States or the implementation of QE3

Hemispheric economic imbalance growing cold. Strongly rejected the United States prior to quantitative monetary policy of the European Union has quietly joined the camp of quantitative monetary policy, the United States is likely to begin their third round of the quantitative monetary policy; and Brazil, China and other countries, inflationary pressures, have continued to tighten monetary policy. Countries in the eastern hemisphere, spreads widen, the exchange rate long-term outlook for the East West case, international hot money will continue to hurt, led by China’s emerging market countries.

A month ago, when the Fed launched the second round of the quantitative easing policy (QE2), the criticism against the policy of voices, but Federal Reserve Chairman Ben Bernanke put down 5 “relentless,” said the QE2 more than the original plan can not be excluded the possibility of the scale of 600 billion U.S. dollars.

Although the Fed has launched QE2, the U.S. unemployment rate rise, not fall. U.S. Labor Department data released on the 3rd of this year in November, the nation’s unemployment rate of non-agricultural sector increased by 0.2 percentage points in October to 9.8%; this point, the U.S. unemployment rate has been 19 consecutive months, 9% of the horizontal line at the top. Combined with published mid-November U.S. consumer price index in October rose only 0.2% qoq, 0.3% lower than expected, the Fed is moving away from quantitative easing inflation and employment objectives become a reality. Market speculation, and if further weak economic data, the U.S. is likely to implement the third round of the quantitative monetary policy.

EU issuance costs soar

Meanwhile, the EU’s economic crisis worsening. International rating agency Standard & Poor’s said Dec. 3, has been Greece’s “BB +” long-term sovereign debt rating placed on negative watch list, the future may again cut the country’s sovereign credit rating. Another rating agency Moody’s said in a report on the 3rd, the Irish high-quality mortgage securities (RMBS) in the default rate will continue to rise.

Ireland need 113 billion U.S. dollars in aid, despite the economic crisis aid the Irish commitment of funds, but because of investor confidence suffered a serious setback, Portugal, Italy and Spain continued difficult to sell bonds last week, the cost of borrowing for 10 years, Spain has increased 144 basis points to 5.42%, while the figure in Portugal rose 70% to 7.01%. Belgian 10-year Treasury bond yields in Germany worse than the comparable 17-year rose to a new high. Poland and the Slovak market is expected to cost about the rapid increase in bond issuance.

In a grim situation, according to market sources, despite the European Central Bank in the “verbal” firmly rejected the possibility of the quantitative easing policy, but has actually taken a step up efforts and other measures to buy bonds. According to market sources, late last week, the European Central Bank bought in batches of Portugal and Ireland bonds, purchased for the regular size of 5 times the size of a substantial reduction in the Ireland, Portugal, financing costs, and stimulate a strong rebound in the euro exchange rate.

Hot Asian inflation

Many countries will continue to raise interest rates

Economic weakness in Europe and America for the emerging market countries, rising inflation, tightening monetary policy step.

Data show that Australia’s November inflation index rose 3 months straight. Analysts said the Fed can not be excluded in Australia, the first quarter of 2011 interest rates by 25 basis points to 5% chance.

3, the Brazilian central bank’s decision, from the 13th of this month, the bank required reserve ratio from 15% to 20%. This year in October, Brazil’s consumer price index up 5.2%. Industry insiders estimate that Brazil will continue to raise benchmark interest rates in 2011, it is possible from the current 10.75% to 12.25%.

China, in October consumer price index rose 4.4%, reaching a 25-month high, and analysts predict the forecast CPI in November increased by 4.7% in value. Last weekend, the tone of monetary policy in China has been officially changed from the original sound relatively relaxed, the market next year China will raise interest rates several times.

Changes in East-West economic situation, exacerbated by China’s economic policy-making difficult. Monetary Policy Committee members prior to Fan Gang said yesterday that China’s inflation rate is unlikely to rise again from 2006 to 2008 appear high, but the quantitative easing policy of the Federal Reserve may continue to impact on the Chinese economy.

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