Moneycontrol Pro Panorama | QE faces a big question mark

Representative Image (Reuters)

Dear Reader,

The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.

Dissent is growing in monetary policy committees around the world. Our Weekender newsletter had detailed and analysed Jayanth Varma’s views on continuing with the accommodating stance of the Reserve Bank of India’s monetary policy.

Varma believes that monetary policy has little role in mitigating human tragedy. A stronger fiscal response is necessary for that. Meanwhile, maintaining an ultra-loose monetary policy could lead to an unanchoring of inflation expectations.

In the US, the meetings of the Fed Open Market Committee show similar misgivings voiced by some central bankers. Minutes of the FOMC’s July meeting showed many members willing to begin tapering asset purchases (quantitative easing or QE) this year if the economic recovery continued to be strong.

Now, all eyes are on the Fed’s Jackson Hole jamboree, its annual symposium on central banking to be held this weekend. It was at this meeting in 2020 that the Fed announced it was moving to an “average inflation” targeting model.

This year market watchers will be looking to glean clues from Fed Chair Jay Powell’s speech on when the US central bank will taper its asset purchases or at least start talking about it.

While some analysts think that Powell will be reluctant to show his hand before the September meeting of the Fed, others such as FT columnist Mohamed El-Erian argue that the longer Powell waits to detail his own thinking, the greater are the economic, financial and institutional risks. You can read his column (free for MC Pro subscribers) here.

Our research team has also written the following notes full of investment insights:
Trent: Can this differentiated brand retailer be back on strong growth path?

Cadila: Vaccine opportunity unfolds

Aurobindo Pharma: Termination of inorganic bet allays capital allocation concerns

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Picks from our Technical Analysts: Tata Motors, Maruti, Mphasis and Marico (These are published every trading day before markets open and can be read on the app)

Ravi Krishnan

Moneycontrol Pro