From Yahoo Financial
Still awash with cash, world economies take turn for the worse
August 20, 2014
By Jeremy Gaunt
LONDON (Reuters) - China's economy is slowing. The euro zone's is a flat line. Japan's sank in the second quarter. Britain has wage deflation. The U.S. economy is ticking over at best.
In a world preoccupied by geopolitical crises - from Ukraine, Iraq and Gaza to the Ebola outbreak in West Africa - the global economy has taken something of a back seat. But there are increasing signs it is in trouble despite being awash with cash from record low interest rates.
Many policymakers across the world would like to move away from this ultra-loose monetary policy, which they introduced to drag their countries out of the financial crisis. But the economies are not playing ball.
Essentially, the economic doldrums have pushed back the time when central banks can start the process of normalising monetary policy. Indeed, in many places it is more likely that central banks will loosen more than pull in.
Take China. Data in July showed cash flowing into the economy plunging to a near six-year low. The housing sector, around 15 percent of the world's second largest economy, is also faltering.
So although overall growth projections for the year remain roughly on track, the latest data has brought the potential for looser Chinese monetary policy.
"The shrinking amount of cash flowing into the economy will harm economic growth," Chen Dongqi, deputy chief at the government think-tank Academy of Macroeconomics Research, told Reuters. "The window has been opened for cutting interest rates and the reserve requirement ratio."
Read more Yahoo Financial >>
Still awash with cash, world economies take turn for the worse
August 20, 2014
By Jeremy Gaunt
LONDON (Reuters) - China's economy is slowing. The euro zone's is a flat line. Japan's sank in the second quarter. Britain has wage deflation. The U.S. economy is ticking over at best.
In a world preoccupied by geopolitical crises - from Ukraine, Iraq and Gaza to the Ebola outbreak in West Africa - the global economy has taken something of a back seat. But there are increasing signs it is in trouble despite being awash with cash from record low interest rates.
Many policymakers across the world would like to move away from this ultra-loose monetary policy, which they introduced to drag their countries out of the financial crisis. But the economies are not playing ball.
Essentially, the economic doldrums have pushed back the time when central banks can start the process of normalising monetary policy. Indeed, in many places it is more likely that central banks will loosen more than pull in.
Take China. Data in July showed cash flowing into the economy plunging to a near six-year low. The housing sector, around 15 percent of the world's second largest economy, is also faltering.
So although overall growth projections for the year remain roughly on track, the latest data has brought the potential for looser Chinese monetary policy.
"The shrinking amount of cash flowing into the economy will harm economic growth," Chen Dongqi, deputy chief at the government think-tank Academy of Macroeconomics Research, told Reuters. "The window has been opened for cutting interest rates and the reserve requirement ratio."
Read more Yahoo Financial >>
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