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Loose monetary policy likely to spread globally

(People's Daily Online)

15:27, June 27, 2012

Under the general trend of global economic slowdown, the emerging economic entities are in urgent need of new stimulus policies, and more emerging economic entities will join in the reduction of interest rates in the future. A loose monetary policy is likely to be implemented all over the world.

The United States will extend "Operation Twist"

According to the report from the Financial Times on June 21, the Federal Reserve Board had announced at the just-concluded meeting that it will extend the "Operation Twist", which refers to selling short-term bonds and buying long-term bonds, to the end of 2012 to provide support for the recovery of increasingly slow U.S. economy. However, the Federal Reserve Board did not launch more radical plan to ease monetary policy.

On the occasion of the two-day meeting coming to a close in Washington, the Federal Open Market Committee responsible for setting interest rates had a more bleak description on the U.S. economy than that on the last meeting two months ago. The FOMC pointed out that the slowdown of the U.S. employment weakened the growth of consumption expenditure and the global financial tensions will continue to bring significant downside risks to the U.S. economic outlook.

Ding Zhijie, dean of the School of Banking and Finance at the University of International Business and Economics, said in an interview with the China National Radio that the quantitative easing including the developed countries in Europe and the United States, to a certain extent, led to a passively loose monetary policy in the developing countries and it also is an important factor causing the last round of inflation in developing countries.

From this point of view, the United States did not implement the third round of quantitative easing, which is not a bad thing to China and other developing countries, Ding said.

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