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Global trend of looser monetary policies

02-10-2012 13:56 BJT

The ECB and BOE may have held fire this time around, but the trend at the moment around the world is monetary policy easing. The ECB has lowered rates twice in recent months, and the UK’s repo rate is at a record low. And of course, the US Federal Reserve has pledged to keep rates near zero until late 2012. But it’s not just developed nations.

Emerging markets as well, such as Brazil and India, have lowered either interest rates or the reserve ratios that banks are required to have on hand. In fact, 7 major central banks around the world lowered their rates in January while 12 others kept theirs unchanged. Notably, there were no rate hikes.

Another tool of monetary policy easing is boosting liquidity in markets.

Fed Chairman Bernanke has expressed the possibility of a third round of quantitative easing - and as we just told you, the BOE announced further asset purchases today and we’re expecting a major funding operation from the eurozone’s central bank.

China is more of a question mark. We saw some easing in the triple R cut back in December, but today’s higher than expected inflation figure has led many to believe it will hold out on any more cuts.

The reason so many central banks are lowering rates or reserve ratios is to stimulate their economies in the face of global headwinds, especially Europe’s debt crisis.

 

Editor:Zhang Rui |Source: CNTV.CN

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