Wednesday, July 17, 2013

There wont be much tapering

Central banks around the world will continue to pursue easy monetary policies and there will be very little tapering. But in the unlikely case, where the US economy were strong and showing strong growth, in half an year or year's time, then they will reduce the purchases of assets.

But in a scenario where the economy stays weak and continues to disappoint, I do not think that they will taper much. In fact, Mr. Bernanke is most likely to retire and some other Fed members will try to make Mr. Bernanke look like a hawk and they have argued for unlimited QEs forever and that is likely to be the case.