FXstreet.com (Barcelona) - Merrill Lynch analysts say that
market reaction to both the Fed and BoJ easing plans suggests
that unconventional policies can still generate strong tailwinds
to risk assets. “Financial conditions have improved notably in
recent months. However, the relief offered by powerful monetary
easing goes hand in hand with the concern that G-4 central banks
are becoming the proverbial bull in the China shop”, wrote
analyst Gustavo Reis, reminding that there is a chance that
global growth picks up faster than policymakers expect, and
quoting Bank of Korea Governor Choogsoo Kim, that alerted “If
advanced economies show stirrings of recovery, then central
banks will have to cope with the possibility of global inflation
as feared in some quarters”. Also, the process of reversing the
monetary policy to absorb the liquidity unleashed through QE
could also act as a shock to the international capital markets.