Meanwhile, the U.S. economic recovery appears to remain stagnant due to the restricted maneuverability in fiscal policy to stimulate economic activity. The combination of a relatively constrained fiscal policy and economic slowdown has naturally compelled them to pin their hopes on their central bank as the savior of the economy.
However, the diminishing room to cut interest rate has coerced central banks like The Federal Reserve to invent creative policies to stimulate economy through “quantitative easing”. As an emerging market country, we, too, suffer the blows of such measure in the form of two-way cross border capital flows.