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The Normalization Of Monetary Policy In Major Developed Countries Will Have A Profound Impact On Global Trade
Feb 05, 2018

The normalization of monetary policy in major developed countries will have a profound impact on global trade

At present, with the full recovery of the global economy, the normalization of monetary policies in the major developed countries has accelerated noticeably. Since the official rate hike in December 2015, the Federal Reserve has raised interest rates five times and announced in October 2017 that it will reduce its total balance sheet by as much as 4.5 trillion U.S. dollars to gradually tighten its monetary policy and monetary policy Normalization, which is the first time the Federal Reserve has contracted since the 2008 international financial crisis. And the Fed will likely raise interest rates by 3 times in 2018. At the same time, the ECB started to reduce the size of its monthly bond purchases in April 2017 and indicated in October 2017 that it will resume the reduction in the size of monthly bond purchases to EUR 30 billion from January 2018 and will continue until 2018 In September, it paved the way for gradual withdrawal from the long-running monetary policy that lasted for many years. In addition, although the Bank of Japan is still emphasizing the continuation of the easing monetary policy, Japan's huge balance sheet scale has begun to shrink. This shows that major developed countries are promoting the normalization of their monetary policies in different ways. It is expected that once the major developed countries tighten their monetary policy, it will lead to the continuous contraction of global liquidity and promote the gradual return of cross-border capital to the developed economies and may trigger drastic fluctuations in global asset prices and exchange rates. Will profoundly affect the growth of global trade and the resulting superimposition effect can not be ignored.