stockuccio
Guest
il deficit statunitense è duro a morire Calculated Risk: Trade Deficit Increases in September
Macroeconomia Crisi finanziaria e sviluppi (3 lettori)
- Creatore Discussione METHOS
- Data di Inizio
mostromarino
Guest
scusa stock....
ti saresti aspettato di meglio in questo momento
???porca miseria
perchè non commenti:
"ovviamente,in questo contesto,il deficit non puo`migliorare"
il risultato non cambia
l`umore SI
stockuccio
Guest
non mi sarei aspettato di meglio ... noto solo che anche con la gravissima crisi interna e il dollaro a 1,50 gli USA rimangono tranquillamente in rosso
mostromarino
Guest
POI QUANDO HAI TEMPO
mi spieghi che gli frega (o mai gli ha fregato)
del tallero basso,contro euro
paologorgo
Chapter 11
strano sia sfuggito a stockuccio...
Which big country will default first?
Of the world's six largest economies, three have budget and public debt positions that if allowed to fester will push those nations into bankruptcy (the seventh largest, Italy, also has a budget and debt position that is highly vulnerable, but its problems appear chronic rather than acute).
Given the proclivities of modern politicians for delaying pain and avoiding problems, it is likely that festering is just what those positions will do. So which major country, the United States, Japan or Britain, will default first on its foreign debt?
The other three of the six top economies, Germany, China and France, appear to have fewer problems but are not out of the woods entirely. Germany has substantial public debt because of the costs involved in integrating the former East Germany, but those costs are now mostly past and the current government is highly disciplined - thus Germany is now the most stable major economy. France is less disciplined; its debt level is similar to that of Germany but its budget deficit is much higher, at around 8% of gross domestic product (GDP) in 2009, according to The Economist forecasting panel. However, its problems pale in comparison to those of the deficit-ridden trio. China has huge amounts of hidden debt in its banking system, which could well collapse, but its direct public debt is small, as is its budget deficit, so it is unlikely to enter formal default.
Asia Times Online :: Asian news and current affairs
Which big country will default first?
Of the world's six largest economies, three have budget and public debt positions that if allowed to fester will push those nations into bankruptcy (the seventh largest, Italy, also has a budget and debt position that is highly vulnerable, but its problems appear chronic rather than acute).
Given the proclivities of modern politicians for delaying pain and avoiding problems, it is likely that festering is just what those positions will do. So which major country, the United States, Japan or Britain, will default first on its foreign debt?
The other three of the six top economies, Germany, China and France, appear to have fewer problems but are not out of the woods entirely. Germany has substantial public debt because of the costs involved in integrating the former East Germany, but those costs are now mostly past and the current government is highly disciplined - thus Germany is now the most stable major economy. France is less disciplined; its debt level is similar to that of Germany but its budget deficit is much higher, at around 8% of gross domestic product (GDP) in 2009, according to The Economist forecasting panel. However, its problems pale in comparison to those of the deficit-ridden trio. China has huge amounts of hidden debt in its banking system, which could well collapse, but its direct public debt is small, as is its budget deficit, so it is unlikely to enter formal default.
Asia Times Online :: Asian news and current affairs
stockuccio
Guest
eh ... se non ci fossi io
bel discorso magari slegato dalla realtà ... tipo quando dice sostenere chi si considera solvibile o serve maggiore trasparenza
Fed's Bill Dudley Explains Bank Runs, Discusses Collateral Risks, Suggests Way To Prevent Systemic Collapse | zero hedge
bel discorso magari slegato dalla realtà
... tipo quando dice sostenere chi si considera solvibile o serve maggiore trasparenza Fed's Bill Dudley Explains Bank Runs, Discusses Collateral Risks, Suggests Way To Prevent Systemic Collapse | zero hedge
METHOS
Forumer storico
strano sia sfuggito a stockuccio...
Which big country will default first?
Of the world's six largest economies, three have budget and public debt positions that if allowed to fester will push those nations into bankruptcy (the seventh largest, Italy, also has a budget and debt position that is highly vulnerable, but its problems appear chronic rather than acute).
Given the proclivities of modern politicians for delaying pain and avoiding problems, it is likely that festering is just what those positions will do. So which major country, the United States, Japan or Britain, will default first on its foreign debt?
The other three of the six top economies, Germany, China and France, appear to have fewer problems but are not out of the woods entirely. Germany has substantial public debt because of the costs involved in integrating the former East Germany, but those costs are now mostly past and the current government is highly disciplined - thus Germany is now the most stable major economy. France is less disciplined; its debt level is similar to that of Germany but its budget deficit is much higher, at around 8% of gross domestic product (GDP) in 2009, according to The Economist forecasting panel. However, its problems pale in comparison to those of the deficit-ridden trio. China has huge amounts of hidden debt in its banking system, which could well collapse, but its direct public debt is small, as is its budget deficit, so it is unlikely to enter formal default.
Asia Times Online :: Asian news and current affairs
A noi proprio non ci considerano...
paologorgo
Chapter 11
stockuccio
Guest
The Worst is yet to Come: Unemployed Americans Should Hunker Down for More Job Losses
http://www.rgemonitor.com/emailthis...ricans_should_hunker_down_for_more_job_losses
Nouriel Roubini | Nov 15, 2009
Think the worst is over? Wrong. Conditions in the U.S. labor markets are awful and worsening. While the official unemployment rate is already 10.2% and another 200,000 jobs were lost in October, when you include discouraged workers and partially employed workers the figure is a whopping 17.5%.
While losing 200,000 jobs per month is better than the 700,000 jobs lost in January, current job losses still average more than the per month rate of 150,000 during the last recession.
Also, remember: The last recession ended in November 2001, but job losses continued for more than a year and half until June of 2003; ditto for the 1990-91 recession.
So we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.
There's really just one hope for our leaders to turn things around: a bold prescription that increases the fiscal stimulus with another round of labor-intensive, shovel-ready infrastructure projects, helps fiscally strapped state and local governments and provides a temporary tax credit to the private sector to hire more workers. Helping the unemployed just by extending unemployment benefits is necessary not sufficient; it leads to persistent unemployment rather than job creation.
The long-term picture for workers and families is even worse than current job loss numbers alone would suggest. Now as a way of sharing the pain, many firms are telling their workers to cut hours, take furloughs and accept lower wages. Specifically, that fall in hours worked is equivalent to another 3 million full time jobs lost on top of the 7.5 million jobs formally lost.
This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.
Other measures tell the same ugly story: The average length of unemployment is at an all time high; the ratio of job applicants to vacancies is 6 to 1; initial claims are down but continued claims are very high and now millions of unemployed are resorting to the exceptional extended unemployment benefits programs and are staying in them longer.
Based on my best judgment, it is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.
The weakness in labor markets and the sharp fall in labor income ensure a weak recovery of private consumption and an anemic recovery of the economy, and increases the risk of a double dip recession.
As a result of these terribly weak labor markets, we can expect weak recovery of consumption and economic growth; larger budget deficits; greater delinquencies in residential and commercial real estate and greater fall in home and commercial real estate prices; greater losses for banks and financial institutions on residential and commercial real estate mortgages, and in credit cards, auto loans and student loans and thus a greater rate of failures of banks; and greater protectionist pressures.
The damage will be extensive and severe unless bold policy action is undertaken now.
http://www.rgemonitor.com/emailthis...ricans_should_hunker_down_for_more_job_losses
Nouriel Roubini | Nov 15, 2009
Think the worst is over? Wrong. Conditions in the U.S. labor markets are awful and worsening. While the official unemployment rate is already 10.2% and another 200,000 jobs were lost in October, when you include discouraged workers and partially employed workers the figure is a whopping 17.5%.
While losing 200,000 jobs per month is better than the 700,000 jobs lost in January, current job losses still average more than the per month rate of 150,000 during the last recession.
Also, remember: The last recession ended in November 2001, but job losses continued for more than a year and half until June of 2003; ditto for the 1990-91 recession.
So we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back.
There's really just one hope for our leaders to turn things around: a bold prescription that increases the fiscal stimulus with another round of labor-intensive, shovel-ready infrastructure projects, helps fiscally strapped state and local governments and provides a temporary tax credit to the private sector to hire more workers. Helping the unemployed just by extending unemployment benefits is necessary not sufficient; it leads to persistent unemployment rather than job creation.
The long-term picture for workers and families is even worse than current job loss numbers alone would suggest. Now as a way of sharing the pain, many firms are telling their workers to cut hours, take furloughs and accept lower wages. Specifically, that fall in hours worked is equivalent to another 3 million full time jobs lost on top of the 7.5 million jobs formally lost.
This is very bad news but we must face facts. Many of the lost jobs are gone forever, including construction jobs, finance jobs and manufacturing jobs. Recent studies suggest that a quarter of U.S. jobs are fully out-sourceable over time to other countries.
Other measures tell the same ugly story: The average length of unemployment is at an all time high; the ratio of job applicants to vacancies is 6 to 1; initial claims are down but continued claims are very high and now millions of unemployed are resorting to the exceptional extended unemployment benefits programs and are staying in them longer.
Based on my best judgment, it is most likely that the unemployment rate will peak close to 11% and will remain at a very high level for two years or more.
The weakness in labor markets and the sharp fall in labor income ensure a weak recovery of private consumption and an anemic recovery of the economy, and increases the risk of a double dip recession.
As a result of these terribly weak labor markets, we can expect weak recovery of consumption and economic growth; larger budget deficits; greater delinquencies in residential and commercial real estate and greater fall in home and commercial real estate prices; greater losses for banks and financial institutions on residential and commercial real estate mortgages, and in credit cards, auto loans and student loans and thus a greater rate of failures of banks; and greater protectionist pressures.
The damage will be extensive and severe unless bold policy action is undertaken now.
stockuccio
Guest
Global Monetary Policy Outlook
http://www.rgemonitor.com/roubini-monitor/257967/global_monetary_policy_outlook/print
RGE Analyst Team | Nov 12, 2009
In this week’s note, we take a look at some recent monetary policy trends in advanced economies. This content is excerpted from a longer piece, “Global Monetary Policy Review” (requires login), which includes in-depth analysis of when the world’s emerging markets might shift interest rate strategy. This longer piece is available exclusively for the use of RGE’s clients.
Last week was a busy one for the Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of England (BoE). Policymaking is tricky when different asset classes are sending very different signals about the economy. However, those different signals are themselves a byproduct of policy. In the U.S., bond markets are discounting a sluggish U-shaped recovery or even a double-dip recession, while risky markets are signaling a strong V-shaped recovery ahead.
Which is right? While RGE leans towards the U-shaped camp, we do not expect risky assets to invert their course as long as the Federal Reserve commits to maintaining “exceptionally low levels of the federal funds rate for an extended period.” So the policy dilemma is one of having to maintain “exceptionally low rates” given the still very difficult real economic conditions, but with the danger of an increasing disconnect between risky asset valuations and the economy–which could eventually snap back and compromise economic and financial stability in the medium term. While this environment reignites the debate on whether central banks should target asset prices or not, RGE maintains that Fed fund hikes are a story for end of 2010 or Q1 2011.
The Bank of England kept its rate on hold at 0.5% for the 8th consecutive month in November with another hold almost certain in December. As the UK economy failed to pull out of recession in Q3 2009, a rise in interest rates is unlikely to occur before Q2 2010; a view supported by evidence in the money markets. The Monetary Policy Committee did move to increase the program of quantitative easing, asking the Chancellor of the Exchequer, Alistair Darling, for an extra £25 billion to be pumped into the economy, bringing the total amount to £200 billion. With interest rates remaining at a historically low level and public finances precarious, quantitative easing has replaced traditional monetary and fiscal policy as the favoured tool of policy makers. The extra £25 billion is likely to act as the final push with the Bank of England attempting to revive an economy operating with spare capacity. It is unlikely that any further increase in quantitative easing will occur, barring a severe economic shock.
The ECB, meanwhile, stayed on hold at 1.0% in November. ECB president Jean-Claude Trichet expressed concern over the excess volatility and strength of the U.S. dollar. Nonetheless, further rate cuts seem unnecessary as signs of economic stabilization and a deceleration of deflation have emerged. Broad money supply growth continues to decelerate and credit to households and non-financial businesses is contracting. The ECB will continue conducting the QE operations it started July 6, but December may be the last tender for its 12-month refinancing operation. Trichet signaled as much, saying "not all our liquidity measures will be needed to the same extent as in the past."
While global monetary policy easing was synchronized, tightening does not need to be. Australia embarked on its rate tightening phase earlier than other developed world central banks. It raised rates twice, in October and November, by 25 basis points each. Australia avoided a recession in 2009 thanks to commodity restocking and prompt fiscal and monetary easing. Australia will likely remain on a gradual easing path, however, until the strength and sustainability of its recovery becomes clearer. Extra government subsidies for home purchases sparked a buying boom that raised Australia's mortgage debt level to a new high. The expiry of those subsidies at the end of 2009 and the increases in interest rates could restrain the recovery of domestic demand. On the other hand, recovering export demand and the expansion of a Treasury program to buy resident MBS may help offset the decline in direct support to home buyers.
Following in the footsteps of the Reserve Bank of Australia, which was the first among advanced economies to hike rates, Norges Bank (Norway's central bank) recently increased its key policy rate by 0.25 percentage points to 1.5%. The executive board's strategy sets the key policy rate interval at 1.25% - 2.25% until its meeting in March 2010. Given the Norwegian economy's mild downturn and strong recovery prospects, monetary tightening was expected. Norges Bank cautioned that a stronger krone could slow its expected pace of rate increases.
In October, the Bank of Japan (BoJ) adjusted its policy to reflect the modest improvements in credit markets and the economy. Due to thawing corporate credit markets and very weak demand* at the BoJ's special facilities to purchase corporate bonds and commercial paper, the Bank of Japan decided to allow those programs to expire at the end of 2009 as planned. Further purchases would only distort corporate debt pricing as liquidity returns to the market. As a safety precaution against potential disruptions to corporate credit for businesses that cannot access market funding, the Bank of Japan extended until March 2010 its program to offer unlimited low interest rate loans to banks, collateralized with corporate debt. However, at the behest of the Ministry of Finance, the Bank of Japan will keep purchasing government debt. Like other central banks that engaged heavily in unconventional easing, the BoJ will roll back its targeted easing programs before resorting to the blunter tool of rate hikes. The BoJ reiterated its view that deflation will grip Japan until 2011, hence the policy rate will likely stay on hold throughout 2010. See Bank of Japan's Exit from Monetary Easing: Strategies and Timing.
After having to hike interest rates aggressively in the 2006– 2008 period, most central banks from emerging market economies had to undo them rapidly from the end of 2008 to Q3 2009, as output gaps widened significantly and inflation and inflation expectations collapsed as a result of the global crisis. Moreover, currencies experienced strong appreciating pressures from the end of Q1 2009 onwards, facilitating the dovish monetary policy reaction. Now that the worst of the global crisis seems to have past, macroeconomic policies are loose, and economic activities are healing, central banks are facing the difficult task of carefully implementing exit strategies, while avoiding exacerbating appreciative pressures on their currencies and trying to control asset inflation and bubbles.
Asian central banks will be the first among emerging markets to tighten monetary policy as capital inflows and loose policies since late 2008 are raising liquidity and asset inflation. But goods inflation will remain within the central banks’ target in most countries amid a slow recovery in domestic demand, weak credit growth in Asia ex-China, and an output gap. This will delay interest rate hikes into 2010, especially in the export-dependent economies, and constrain aggressive tightening until domestic and external demand improve further. Until then, Asian central banks will continue to fight credit and asset bubbles via liquidity absorption and regulatory and prudential measures, such as in real estate. Countries that are less export-dependent and have attractive asset markets—India, South Korea and Indonesia—will be the first ones to hike rates and allow currency appreciation. In November 2009, Taiwan banned foreign inflows in time deposits and might resort to further capital controls. If hot inflows maintain their momentum, other Asian countries might use enforcement or regulatory measures to manage capital flows.
In Latin America, there is a marked differentiation on the speed of the economic recovery; however, most countries will experience slow closing of the output gaps over the next year. Moreover, stable if not strong currencies (BRL, CLP, COP, MXN, and PEN) and limited upward wage pressures should help in containing probable external supply-side shocks emerging from commodity prices and limit inflationary pressures sparked by recovering domestic demand. Although inflation and inflation expectations will bounce back, central banks will most likely achieve their inflation targets in 2010. Nevertheless, monetary authorities will start moving away from a very loose monetary policy stance toward a neutral one in 2010 in order to safeguard medium-term inflation expectations once the recovery has gained momentum. In this light, central banks mainly will target the monetary policy rate. However, upward adjustment in other monetary policy instruments (reserve requirements and margin reserve requirements) will likely be implemented. Those central banks that have acted the most aggressively and face potential surprises to the upside in growth and inflation will initiate the mapping out of excessive accommodation sooner than the rest.
Rate hikes in Central and Eastern European (CEE) countries are expected to lag those in other emerging market regions given the particularly sharp downturn in the CEE and prospects for a weak recovery. Many central banks are still in easing mode, amid economic contractions and easing inflation. Uneven growth prospects across the region mean monetary policy paths will vary.
Aside from Israel, which in August became the first country globally to begin raising interest rates, Middle East and Africa will remain effectively on hold until late in 2010. Most of the GCC countries peg to the U.S. dollar and thus import U.S. monetary policy. Meanwhile despite the inflationary impact of a weak dollar, tight domestic credit conditions will restrain a liquidity surge.
--
* As of Sept. 30, only 100 billion yen of commercial paper (CP) was offered for the BoJ to purchase - just 3% of the 3 trillion yen allocated by the BoJ for the CP purchasing program. Only 300 billion yen of corporate bonds was offered for the BoJ to purchase - just 30% of 1 trillion yen allocated for the corporate bond purchasing program.
http://www.rgemonitor.com/roubini-monitor/257967/global_monetary_policy_outlook/print
RGE Analyst Team | Nov 12, 2009
In this week’s note, we take a look at some recent monetary policy trends in advanced economies. This content is excerpted from a longer piece, “Global Monetary Policy Review” (requires login), which includes in-depth analysis of when the world’s emerging markets might shift interest rate strategy. This longer piece is available exclusively for the use of RGE’s clients.
Last week was a busy one for the Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of England (BoE). Policymaking is tricky when different asset classes are sending very different signals about the economy. However, those different signals are themselves a byproduct of policy. In the U.S., bond markets are discounting a sluggish U-shaped recovery or even a double-dip recession, while risky markets are signaling a strong V-shaped recovery ahead.
Which is right? While RGE leans towards the U-shaped camp, we do not expect risky assets to invert their course as long as the Federal Reserve commits to maintaining “exceptionally low levels of the federal funds rate for an extended period.” So the policy dilemma is one of having to maintain “exceptionally low rates” given the still very difficult real economic conditions, but with the danger of an increasing disconnect between risky asset valuations and the economy–which could eventually snap back and compromise economic and financial stability in the medium term. While this environment reignites the debate on whether central banks should target asset prices or not, RGE maintains that Fed fund hikes are a story for end of 2010 or Q1 2011.
The Bank of England kept its rate on hold at 0.5% for the 8th consecutive month in November with another hold almost certain in December. As the UK economy failed to pull out of recession in Q3 2009, a rise in interest rates is unlikely to occur before Q2 2010; a view supported by evidence in the money markets. The Monetary Policy Committee did move to increase the program of quantitative easing, asking the Chancellor of the Exchequer, Alistair Darling, for an extra £25 billion to be pumped into the economy, bringing the total amount to £200 billion. With interest rates remaining at a historically low level and public finances precarious, quantitative easing has replaced traditional monetary and fiscal policy as the favoured tool of policy makers. The extra £25 billion is likely to act as the final push with the Bank of England attempting to revive an economy operating with spare capacity. It is unlikely that any further increase in quantitative easing will occur, barring a severe economic shock.
The ECB, meanwhile, stayed on hold at 1.0% in November. ECB president Jean-Claude Trichet expressed concern over the excess volatility and strength of the U.S. dollar. Nonetheless, further rate cuts seem unnecessary as signs of economic stabilization and a deceleration of deflation have emerged. Broad money supply growth continues to decelerate and credit to households and non-financial businesses is contracting. The ECB will continue conducting the QE operations it started July 6, but December may be the last tender for its 12-month refinancing operation. Trichet signaled as much, saying "not all our liquidity measures will be needed to the same extent as in the past."
While global monetary policy easing was synchronized, tightening does not need to be. Australia embarked on its rate tightening phase earlier than other developed world central banks. It raised rates twice, in October and November, by 25 basis points each. Australia avoided a recession in 2009 thanks to commodity restocking and prompt fiscal and monetary easing. Australia will likely remain on a gradual easing path, however, until the strength and sustainability of its recovery becomes clearer. Extra government subsidies for home purchases sparked a buying boom that raised Australia's mortgage debt level to a new high. The expiry of those subsidies at the end of 2009 and the increases in interest rates could restrain the recovery of domestic demand. On the other hand, recovering export demand and the expansion of a Treasury program to buy resident MBS may help offset the decline in direct support to home buyers.
Following in the footsteps of the Reserve Bank of Australia, which was the first among advanced economies to hike rates, Norges Bank (Norway's central bank) recently increased its key policy rate by 0.25 percentage points to 1.5%. The executive board's strategy sets the key policy rate interval at 1.25% - 2.25% until its meeting in March 2010. Given the Norwegian economy's mild downturn and strong recovery prospects, monetary tightening was expected. Norges Bank cautioned that a stronger krone could slow its expected pace of rate increases.
In October, the Bank of Japan (BoJ) adjusted its policy to reflect the modest improvements in credit markets and the economy. Due to thawing corporate credit markets and very weak demand* at the BoJ's special facilities to purchase corporate bonds and commercial paper, the Bank of Japan decided to allow those programs to expire at the end of 2009 as planned. Further purchases would only distort corporate debt pricing as liquidity returns to the market. As a safety precaution against potential disruptions to corporate credit for businesses that cannot access market funding, the Bank of Japan extended until March 2010 its program to offer unlimited low interest rate loans to banks, collateralized with corporate debt. However, at the behest of the Ministry of Finance, the Bank of Japan will keep purchasing government debt. Like other central banks that engaged heavily in unconventional easing, the BoJ will roll back its targeted easing programs before resorting to the blunter tool of rate hikes. The BoJ reiterated its view that deflation will grip Japan until 2011, hence the policy rate will likely stay on hold throughout 2010. See Bank of Japan's Exit from Monetary Easing: Strategies and Timing.
After having to hike interest rates aggressively in the 2006– 2008 period, most central banks from emerging market economies had to undo them rapidly from the end of 2008 to Q3 2009, as output gaps widened significantly and inflation and inflation expectations collapsed as a result of the global crisis. Moreover, currencies experienced strong appreciating pressures from the end of Q1 2009 onwards, facilitating the dovish monetary policy reaction. Now that the worst of the global crisis seems to have past, macroeconomic policies are loose, and economic activities are healing, central banks are facing the difficult task of carefully implementing exit strategies, while avoiding exacerbating appreciative pressures on their currencies and trying to control asset inflation and bubbles.
Asian central banks will be the first among emerging markets to tighten monetary policy as capital inflows and loose policies since late 2008 are raising liquidity and asset inflation. But goods inflation will remain within the central banks’ target in most countries amid a slow recovery in domestic demand, weak credit growth in Asia ex-China, and an output gap. This will delay interest rate hikes into 2010, especially in the export-dependent economies, and constrain aggressive tightening until domestic and external demand improve further. Until then, Asian central banks will continue to fight credit and asset bubbles via liquidity absorption and regulatory and prudential measures, such as in real estate. Countries that are less export-dependent and have attractive asset markets—India, South Korea and Indonesia—will be the first ones to hike rates and allow currency appreciation. In November 2009, Taiwan banned foreign inflows in time deposits and might resort to further capital controls. If hot inflows maintain their momentum, other Asian countries might use enforcement or regulatory measures to manage capital flows.
In Latin America, there is a marked differentiation on the speed of the economic recovery; however, most countries will experience slow closing of the output gaps over the next year. Moreover, stable if not strong currencies (BRL, CLP, COP, MXN, and PEN) and limited upward wage pressures should help in containing probable external supply-side shocks emerging from commodity prices and limit inflationary pressures sparked by recovering domestic demand. Although inflation and inflation expectations will bounce back, central banks will most likely achieve their inflation targets in 2010. Nevertheless, monetary authorities will start moving away from a very loose monetary policy stance toward a neutral one in 2010 in order to safeguard medium-term inflation expectations once the recovery has gained momentum. In this light, central banks mainly will target the monetary policy rate. However, upward adjustment in other monetary policy instruments (reserve requirements and margin reserve requirements) will likely be implemented. Those central banks that have acted the most aggressively and face potential surprises to the upside in growth and inflation will initiate the mapping out of excessive accommodation sooner than the rest.
Rate hikes in Central and Eastern European (CEE) countries are expected to lag those in other emerging market regions given the particularly sharp downturn in the CEE and prospects for a weak recovery. Many central banks are still in easing mode, amid economic contractions and easing inflation. Uneven growth prospects across the region mean monetary policy paths will vary.
Aside from Israel, which in August became the first country globally to begin raising interest rates, Middle East and Africa will remain effectively on hold until late in 2010. Most of the GCC countries peg to the U.S. dollar and thus import U.S. monetary policy. Meanwhile despite the inflationary impact of a weak dollar, tight domestic credit conditions will restrain a liquidity surge.
--
* As of Sept. 30, only 100 billion yen of commercial paper (CP) was offered for the BoJ to purchase - just 3% of the 3 trillion yen allocated by the BoJ for the CP purchasing program. Only 300 billion yen of corporate bonds was offered for the BoJ to purchase - just 30% of 1 trillion yen allocated for the corporate bond purchasing program.