American and European Central Bank will soon tackle two problems at once: with the threat of deflation and inflation, which could begin immediately after the end of the world financial crisis. Moreover, experts fear that it will provoke a sharp increase in rates on loans and to defer indefinitely the recovery of world economy, transmits Reuters.
Immediately after the start of the credit crisis, Central Bank of Europe and the United States began the cycle of lowering interest rates, trying to explained the growth of world economy. Recently, however, the economy began to stabilize, and many experts began to talk seriously about the threat of inflation.
"It is very important to predict when to change monetary policy and begin to raise rates. I am afraid that this time the world's Central Bank does not guess, and the world face the threat of inflation," - said former representative Robert FRB Atlanta Ayzenbays. This expert added that the situation worsens the sharp rise in unemployment: in April the unemployment rate in the United States stood at 8.9%, and many predict that the growth rate up to 10%.
Just a month ago, a regular meeting of the Federal Reserve System (FRS) the USA, which carries out the function of the Central Bank in the country. Even then, the first calls to raise the discount rate, to avoid a sharp rise in inflation. However, most lawmakers expect to avoid inflation of at least the next few years.
However, this point of view have not all experts. "Market participants concerned about the possible rise in inflation. However, the reasons to fear at all different. The most interesting thing is that in the case of growth of inflationary expectations (not the inflation rate), the restoration of the world economy would be suspended for an indefinite period", - said JPMorgan Chase economist Michael Feroli.
Meanwhile, pour oil into the fire and the weakening dollar. "As the market starts to believe in the speedy recovery of U.S. economy, the dollar begins to weaken, which in turn dramatically increases the growth of inflation", - believes Professor of Economics Oberlin College Ellis Tallman. According to him, in case of aggravation of crisis, the U.S. currency once again begin to grow and market participants once again speak about the increased risk of deflation.
In turn, the U.S. Federal Reserve head Ben Bernanke said back in mid-May that U.S. policymakers will maintain its policy of strong dollar, since all are now profitable stability. "Of course, we are trying to avoid deflation and further economic slowdown. But we also try to avoid a sharp rise in inflation after the growth rate of the U.S. economy will recover," - said the head of the Fed. A similar statement was made Vice-President of the European Central Bank (ECB), Lucas Papademos: "Our objective - price stability, and after improving macroeconomic conditions, we will begin to change our monetary policy."
According to estimates of most economists, the euro should not fear a sharp increase in inflation: in any case, it is unlikely that in the next two years, it might go beyond the threshold set by the ECB of 2%. "The question of price stability should be devoted exclusively to the CB. But I believe that at present the risk of deflation is much more growth than the risk of inflation", - said UniCredit economist Aurelio Makkario.
RBC
Immediately after the start of the credit crisis, Central Bank of Europe and the United States began the cycle of lowering interest rates, trying to explained the growth of world economy. Recently, however, the economy began to stabilize, and many experts began to talk seriously about the threat of inflation.
"It is very important to predict when to change monetary policy and begin to raise rates. I am afraid that this time the world's Central Bank does not guess, and the world face the threat of inflation," - said former representative Robert FRB Atlanta Ayzenbays. This expert added that the situation worsens the sharp rise in unemployment: in April the unemployment rate in the United States stood at 8.9%, and many predict that the growth rate up to 10%.
Just a month ago, a regular meeting of the Federal Reserve System (FRS) the USA, which carries out the function of the Central Bank in the country. Even then, the first calls to raise the discount rate, to avoid a sharp rise in inflation. However, most lawmakers expect to avoid inflation of at least the next few years.
However, this point of view have not all experts. "Market participants concerned about the possible rise in inflation. However, the reasons to fear at all different. The most interesting thing is that in the case of growth of inflationary expectations (not the inflation rate), the restoration of the world economy would be suspended for an indefinite period", - said JPMorgan Chase economist Michael Feroli.
Meanwhile, pour oil into the fire and the weakening dollar. "As the market starts to believe in the speedy recovery of U.S. economy, the dollar begins to weaken, which in turn dramatically increases the growth of inflation", - believes Professor of Economics Oberlin College Ellis Tallman. According to him, in case of aggravation of crisis, the U.S. currency once again begin to grow and market participants once again speak about the increased risk of deflation.
In turn, the U.S. Federal Reserve head Ben Bernanke said back in mid-May that U.S. policymakers will maintain its policy of strong dollar, since all are now profitable stability. "Of course, we are trying to avoid deflation and further economic slowdown. But we also try to avoid a sharp rise in inflation after the growth rate of the U.S. economy will recover," - said the head of the Fed. A similar statement was made Vice-President of the European Central Bank (ECB), Lucas Papademos: "Our objective - price stability, and after improving macroeconomic conditions, we will begin to change our monetary policy."
According to estimates of most economists, the euro should not fear a sharp increase in inflation: in any case, it is unlikely that in the next two years, it might go beyond the threshold set by the ECB of 2%. "The question of price stability should be devoted exclusively to the CB. But I believe that at present the risk of deflation is much more growth than the risk of inflation", - said UniCredit economist Aurelio Makkario.
RBC
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