14/05/2014
Official in the "Federal Reserve" confirms from Riyadh: a gradual withdrawal of quantitative easing policy
The conditions of the U.S. economy justifies start lifting interest during 2015
Dennis Lockhart, President of the Federal Reserve Bank of Atlanta, the Federal Reserve began months ago with a gradual withdrawal of quantitative easing policy, based on the asset purchase, or bonds, worth $ 85 billion per month. He explained that as of December last year, the Central Bank reduced the monthly purchases from 85 billion dollars to the current level of 45 billion dollars. He expected that the program will expire by October or December this year. Lockhart pointed out in a lecture today in Riyadh of us investors and Saudi businessmen focused on aspects of global and US economies, monetary policy of the Federal Reserve, given the weight of the US economy and the importance of the dollar in global economic affairs, where he commented on how the US Central Bank policy in the rest of the world, particularly emerging market countries.
He also commented on the risks and explains concerns about financial stability being calculated in his thinking about monetary policy. Lockhart started talking about the global economy, said the financial crisis during 2007 and 2008 has affected the whole world, and the resulting slump in the United States also hit many developed countries, has led to a deadlock situation and the weakness of the economy. He stressed that many emerging markets have performed relatively well in the years following the recession – from 2009 to 2011, before slowing down in the last period. He said: 'overall, progress has been slow in most parts of the world. Lockhart said that in order to support growth, the Central Bank on monetary policy in line with the economic situation in the United States, Europe and Japan. While interest rates at extremely low levels. In other words, says Lockhart, ' cost of credit remains unusually low.
Were certain aspects of completely unconventional monetary policy, especially in the United States and Japan, where it is no longer possible to push short-term interest rates down more, which the world has ever known as ' quantitative easing '. He said that conditions in some emerging markets have seen turmoil in recent period, where some countries have experienced large flows, which resulted to some extent from the Federal Reserve with the phased withdrawal of the asset purchase, some countries, volatility in exchange rates and financial markets. And there is concern pending on market fundamentals in emerging markets, particularly in countries experiencing high inflation and large current account deficits. It can be said that the world economy is gradually recovering with moderate growth and low inflation, but at the same time, declining resources in developed countries.
He said, ' from my point of view, this is the first step towards gradual normalization of monetary policy. Assuming a continuation of the recovery in the US economy and close the inflation gap, the Bank will begin raising official interest rates at some point in the coming year, and for the time being the official interest rates remain near zero, the Federal open market Committee through its official its intention to keep interest rates low longer than official '. It was based on his analysis of the prospects for the US economy; it is believed that conditions in the US economy would justify beginning to raise interest rates in the second half of the year 2015. When interest rates start to rise, it is expected that the process of normalizing interest rates would be gradual. And the impact of US monetary policy in the world commented Lockhart that the world is watching us monetary policy closely, adding that movements of funds within the affected by expectations about fed policy. The recent upheaval in some emerging markets to a significant controversy about the impact of American policy on the rest of the world.
The questions raised some about the wisdom of the decision and its timing in the gradual withdrawal of extraordinary stimulus measures, a decision which was in apparent shows no regard for the impact on other countries. Investors said: ' I would like to give you my perspective as being one of the policy makers in the United States. Changes in financial conditions definitely affect interest rates and asset prices in other countries through American channels. Central Bank policy affects us in movements and their effects, which in turn affects the rates of exchange for the foreign currency and bond markets, foreign and domestic '. The Federal Reserve tried to be transparent about its orientation in monetary policy. In his view, he felt that the Bank had made clear in its decision regarding the intention of the gradual withdrawal of quantitative easing and asset purchases, and eventually starts raising interest rates, at a time when the US economy is recovering and the policy objectives look more attainable.
Lockhart stressed that the interest of the world that the US economy is strong, and to follow the Central Bank policies in favor of improved conditions. He said that while the US economy will improve in the medium term, prospects for economic growth in emerging countries will also at the same time. At the conclusion of his lecture said Lockhart tried to summarize a US perspective regarding prevailing economic conditions today, and which is believed to affect all parties, pointing out that he learned early in his career that the geographic location affect the person's perspective, and that the place be accessible it often determines your stance. He was confident of the world seems to be somewhat different when viewed from the Middle East, and that the people attending that important.
