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  1. ‘Focus on monetary policies of developed nations’

‘Focus on monetary policies of developed nations’

The Financial Stability Report (FSR) released on Wednesday asserted the need to focus on the effects of divergent monetary policies in developed economies.

By: | Published: December 24, 2015 12:30 AM

The Financial Stability Report (FSR) released on Wednesday asserted the need to focus on the effects of divergent monetary policies in developed economies.

While the first rate hike by the US Federal Reserve since 2006 did not appear to have caused any major immediate impact on financial markets, its effects would need to be seen in the light of the developments on real economy, the report said.

While the US is in a rising interest rate regime, the Eurozone and Japan still continue to adopt easy monetary policy.

In its recent policy review, the European Central Bank (ECB) had extended its quantitative easing programme to March 2017 without expanding the same and reduced interest rates on the deposit facility to another historic low. Bank of Japan didn’t immediately go ahead with further QE amidst tight labour market.

“In any case, the emerging dynamics in global markets do call for a discerning look at the distinction between “risk” and “uncertainty”,” the report said.

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