Quantitative Easing And Emerging Markets: A Crisis In The Making? - Analysis Eurasia Review

Quantitative Easing And Emerging Markets: A Crisis In The Making? - Analysis Eurasia Review:

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Back in September, governments worldwide were braced for the US Federal Reserve to announce a scaling back of its quantitative easing (QE) program. This “taper,” as it came to be known, would have been the first incremental reduction of Fed purchases of government bonds, marking the beginning of the end of artificially low interest rates and free-flowing easy money.

But as we now know, the Fed’s September meeting left the quantitative easing program fully intact. For outgoing Chairman Ben Bernanke, the signs of US economic recovery were still tenuous and vulnerable to the market upheaval that will inevitably follow a taper; even though some would argue that equity markets had already prepared themselves to absorb the shock of just such an announcement.

Equity markets have hummed along since then, reaching a series of record highs. As for the inevitable taper, it has been put off until a vague and unspecified point in the future when the US economic recovery has become fully entrenched; a time that will now be decided by Janet Yellen, President Obama’s nominee to replace Bernanke."

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