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17 Apr 2013
Forex Flash: QE did not lead to economic recoveries in the US and the UK - Nomura
FXstreet.com (Barcelona) - Richard Koo, Chief economist at the Nomura Research Institute notes that QE did not lead to economic recoveries in the US and the UK.
He begins by noting that the next question is what Japan will accomplish once its monetary base reaches the levels of the US or the UK. Inflation in both of these economies is around 2% and real interest rates are heavily negative, which is what Mr. Kuroda seeks. Yet the unemployment rate remains at 7.8% in the UK and 7.6% in the US. The UK is in the midst of a triple-dip recession, and recent US consumption and jobs data have not been particularly encouraging. He writes, “Japan, meanwhile, has an unemployment rate of 4.3%, far below the 6.5% level at which the Fed says it will discontinue its zero interest rate policy. That suggests Japan’s economy may not necessarily enjoy a resurgence even if the BOJ succeeds in lifting inflation rate to 2%.”
He begins by noting that the next question is what Japan will accomplish once its monetary base reaches the levels of the US or the UK. Inflation in both of these economies is around 2% and real interest rates are heavily negative, which is what Mr. Kuroda seeks. Yet the unemployment rate remains at 7.8% in the UK and 7.6% in the US. The UK is in the midst of a triple-dip recession, and recent US consumption and jobs data have not been particularly encouraging. He writes, “Japan, meanwhile, has an unemployment rate of 4.3%, far below the 6.5% level at which the Fed says it will discontinue its zero interest rate policy. That suggests Japan’s economy may not necessarily enjoy a resurgence even if the BOJ succeeds in lifting inflation rate to 2%.”