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Global monetary easing party continues

Friday, March 13, 2015 - 02:25

The most 'uncoordinated' global monetary policy in three decades: that's a view taking hold as Russia and Asian central banks embark on an apparent free-for-all of cuts - while their counterparts in the US and UK appear in stasis. Kirsty Basset reports.

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Moving in seemingly opposite directions. As speculation grows that the U.S may soon tighten monetary policy by raising interest rates - Europe is loosening - this week launching its bond buying program - which is expected to continue into 2016. The divergence is being played out on currency markets - where this week the euro fell to a 12 year low against the dollar, and is predicted to reach parity. In an environment of weak global demand and slowing growth, central banks are taking centre stage. CMC Chief Market Analyst Michael Hewson. (SOUNDBITE)(ENGLISH) CMC CHIEF MARKET ANALYST MICHAEL HEWSON SAYING: "Central banks are having an inordinant amount of effect on what currency flows and money flows are doing. But I think it's largely as a result of the fact of political inaction - not only in Europe but also in the U.S. and around the world." Russia is the latest country to join the global easing club - its central bank lowering rates on Friday by a percentage point. In Asia - Thailand and South Korea also joined in this week, announcing surprise rate cuts. Singapore, China, India and Indonesia have also announced unexpected easing measures. And they're far from alone - at least 20 central banks have eased monetary policy since the start of the year. The only country potentially bucking the trend is the U.S. With The Fed's policy setting committee meeting next week - investors will be watching and listening closely for clues. But not everyone's convinced a U.S. rate hike is a done deal. (SOUNDBITE)(ENGLISH) CMC CHIEF MARKET ANALYST MICHAEL HEWSON SAYING: "Will the Federal Reserve, given what's happening with inflation across the world look at raising rates at a time when wages are falling, and inflation is falling, and retail sales growth and durable goods growth in the U.S. economy is currently negative. I think markets are pricing in much too high an expectation that we're going to get a rate rise this year." It wouldn't be the first time expectations have been dashed. The Bank of England shot down hopes of any imminent movement on Thursday - with Governor Mark Carney signalling he's in no hurry to see rates go up.

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Global monetary easing party continues

Friday, March 13, 2015 - 02:25