China Joins ECB in Adding Stimulus as Fed Scales Back
By Bloomberg News Sep 17, 2014
China’s central bank joined its European counterpart in boosting liquidity to address weakening growth, underscoring a divergence in direction among the world’s biggest economies as the U.S. reduces stimulus.
The People’s Bank of China is injecting 500 billion yuan ($81 billion) into the nation’s largest banks, according to a government official familiar with the matter, signaling the deepest concern yet with an economic slowdown. Federal Reserve Chair Janet Yellen will announce another $10 billion cut to its monthly bond purchases after this week’s meeting, economists forecast, as she steers toward gradual interest-rate increases.
China’s credit expansion builds on targeted measures to shore up growth while stopping short of broad-based stimulus seen in the U.S. in the wake of the global financial crisis and still being pushed in Europe and Japan. By attaching a three-month term to its injection, China is taking a step down that path while maintaining control of a process designed to fuel demand for credit in an already debt-laden economy.
“It’s like quantitative easing with Chinese characteristics,” said Louis Kuijs, Royal Bank of Scotland Group Plc’s chief Greater China economist in Hong Kong, who formerly worked at the World Bank. “The threat is that growth is slowing down below the comfort level of policy makers and that will then also warrant further easing steps.”
Read More: bloomberg.com
What will happen after interest rates creep up?
Pumping literally TRILLIONS of electronic money on banks’ computers has not produced a recovery with jobs and prosperity.
Instead officials offer empty promises about a fake recovery and we witness more military conflicts and tensions.
Fed Keeps ‘Considerable Time’ Pledge as Growth ‘Moderate’
By Jeff Kearns and Steve Matthews
The Federal Reserve maintained a commitment to keep interest rates near zero for a “considerable time” after asset purchases are completed, saying the economy is expanding at a moderate pace and inflation is below its goal.
“The labor market has yet to fully recover,” Fed Chair Janet Yellen said at a press conference after a meeting of the Federal Open Market Committee today in Washington. “There are still too many people who want jobs but can’t find them.” She added that “inflation has been running below the committee’s 2 percent objective.” In July, the Fed said inflation was “somewhat closer” to its goal.
Read more: http://www.bloomberg.com/news/2014-09-17/fed-keeps-considerable-time-pledge-as-growth-is-moderate-.html