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Monetary Policy

26 November 2018 / Europe

ECB must address QE misallocation risk

By the end of this year, the European Central Bank is expected to end its monthly net asset purchases. This raises several questions about the ECB's reinvestment strategy and the implications for individual countries. The central bank's quantitative easing programme was not as successful as believed. The real issue for the ECB governing council to address when discussing fiscal implications of reinvestment is the risk arising from the misallocation of liquidity and corresponding claims and liabilities.

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26 November 2018 / Asia Pacific

Interference and independence at RBI

Political risk series:Interference and independence at the Reserve Bank of India

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25 November 2018 / North America,Latin America Caribbean,Middle East,Global

In conversation: Caroline Atkinson

In conversation: Caroline Atkinson

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20 November 2018 / Global

Opening for US-China renminbi action

Since early April, the renminbi has fallen 10% against the dollar, largely reflecting dollar strength. The causes lie in the cyclical and monetary policy divergence between the US and China. However, there is an alignment of interests. Both want to pursue their domestic economic agendas without the complications of a falling renminbi. This could create an opening for unexpected co-operative action by the US Treasury and the People's Bank of China – a joint foreign exchange intervention operation to strengthen the renminbi.

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14 November 2018 / North America

Fed Talk: US midterms special

Fed Talk: US midterms special

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13 November 2018 / US

Doves waiting in Fed wings

The rotation of voting members of the Federal Open Market Committee after its December meeting will bring to the fore outspoken doves, James Bullard of the St. Louis Fed and Charles Evans of the Chicago Fed, to balance out incoming hawks. Bullard made headlines in mid-October by calling for the Fed to stop raising rates and has proposed changed in how the Fed views the sustainability of current low unemployment and its effect on inflation. So far, the Fed has been able to raise rates because the economy has outperformed.

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12 November 2018 / US

Rising external deficit 'made in USA'

As US external deficits widen in response to relatively strong US economic performance and imbalanced macroeconomic policies, there is a considerable risk the Trump administration could amplify its protectionist rhetoric and actions. Yet rising US trade and current account deficits are largely 'made in America'. The increasing divergence between the US and other major global economies, aggravated by the imbalanced US macroeconomic policy mix, remains the most striking aspect of the worsening currency confusion.

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05 November 2018 / US

US faces twin deficit crisis

The US trade deficit has widened steadily over the past two years, reaching a record high of almost $1tn annually. As a result of Washington's expansive budget policy at this late stage in the economic cycle, analysts expect that over the next two years the US budget deficit will rise to a peace-time high of more than $1tn. This makes it probable that the US will face a twin deficit problem – an outsized budget deficit and an outsized trade deficit – last seen in the 1980s during Ronald Reagan's presidency.

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