Foreign investors continue to exit Indian markets even though US bond markets are cooling off. If anything, tapering may increase the outflow.
Fed chair Jerome Powell indicated that the time between the end of tapering and the first rate hike could be short. Interestingly, the rationale for that has less to do with inflation, but more to do with the strong demand environment and labour market tightness
While the “tapering” is steeper than earlier cycle of 2014, Jerome Powell emphasized its need, given that inflation this time is much higher, job openings are better and “demand is very, very strong”.
In 2013, as the world was coming out of a global financial crisis, the United States Federal Reserve said it would gradually reduce quantitative easing instituted after the Lehman Brothers bankruptcy in 2008. This would involve slowing the purchase of treasury bonds and hence reducing the money being pumped into the US economy.
Jim Walker of Asianomics is worried about the rising consumer prices and how they may affect the market. As consumer prices pick up, the policy makers, he said, will be forced to tighten policy while economic growth rises.
DAVOS, Switzerland (Reuters) - A trade war between the United States and China and a strengthening dollar are among the biggest threats to a brightening global economic outlook, according to leading economists at the World Economic Forum in Davos.
Expect next 18 months to be good for global equities, says Rahul Chadha, Co-CIO at Mirae Asset Global Investments (HK) Limited.
There's a chilling trend in the market, and it could wreak havoc on your portfolio, a top market watcher said.
"Whether (other) central banks still have in their possession the types of tools to influence this situation (is the subject of a very broad discussion)," Russia Central Bank Governor Elvira Nabiullina told CNBC in Moscow.
Nick Parsons of National Australia Bank believes any further QE could be counter-productive in the financial stability and banking sector profitability of the system and would have a negative impact on business consumer confidence.
The central bank may cut rate by 25 bps today and another 25 bps by the end of this year to save the economy from running into recession, says Hartmut Issel of UBS.
The Bank of England is signalling a rate cut in July-August, but it is the US Federal Reserve's action on interest rate that will have to be watched in the coming months, Richard Jerram, Chief Economist, Bank of Singapore, told CNBC-TV18.
Prabhat Awasthi, head of India equities, Nomura, says Bank of Japan's move to go into negative interest rate zone was more of a rate signal and not a liquidity tool for markets
Marc Faber, the editor and publisher of the Gloom, Doom & Boom Report (earning him the moniker "Dr. Doom"), added that he questioned central bank policymakers and the quantitative easing (QE) programs they launched in the US, euro zone, UK and Japan.
Michelle Meyer, deputy head of US economics at Bank of America Merrill Lynch said while there's a lot that could move the markets through the end of this week, US Fed chair Janet Yellen will remain focused on what's going on in Europe.
With the European Union continuing to reel under chronic conditions of low inflation and high unemployment, the European Central Bank (ECB) today cut interest rate on deposit facility by 10 basis points to -0.30 percent. It also decided to extend its existing asset purchases programme until end March 2017.
Analysts expect ECB chief Mario Draghi to extend the central bank's quantitative easing programme, probably announce another euro 10 billion of additional asset purchases each month, as well as cut deposit rates.
The Fed is now taking baby steps toward ending its crisis-era policy, laying the groundwork for a widely expected interest rate hike in a few weeks.
The ECB's likely cuts come as the US Federal Reserve is widely expected to implement its first hike to its benchmark rate in nine years at its December meeting. That's likely to strengthen the dollar as it will increase expected returns in the US.