Will it become evident to the public that central banks are engaging in competitive devaluation?
*The Wall Street Journal, by Megumi Fujikawa & David Wessel, October 4, 2010
”Central Banks Open Spigot
The developed world’s central banks are moving – at varying speeds and intensity – to respond to a weak recovery, reduce the risks of a global deflation and restrain their currencies from rising against those of their trading partners.
On Tuesday, it was the Bank of Japan’s move. Anticipating that the U.S. Federal Reserve will resume large-scale purchases of U.S. Treasury bonds and confronted with strong domestic political pressure to spur growth and restrain a rising yen, the Japanese central bank launched a bond-buying program. It said it would spend 5 trillion yen ($60 billion) to buy government bonds, corporate IOUs, real-estate investment trust funds and exchange-traded funds – the latter two a departure from past practice.
The world’s main central banks are moving to respond to a weak global recovery, aiming to reduce global deflation risks and to stop their currencies from rising against those of trading partners. David Wessel discusses. Also, Neil King says Tea Party groups are setting aside their differences with the GOP and backing mainstream GOP candidates in midterm elections.
“If a central bank tries to seek greater impact from its monetary policy, there is no choice but to jump into such a world,” said Masaaki Shirakawa, governor of the Bank of Japan.
Central bankers elsewhere are strongly indicating that they are preparing to open credit spigots to reflate their economies at a time when fiscal policy is stalled or contracting.”
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