US Fed Corona Corona Response to "Quantitative Easing" Reduction Impact on Global Economy

US monetary policy is at a major turning point.

The Federal Reserve Board, the central bank, is expected to formally decide to reduce the scale of the "quantitative easing" that was introduced in response to the crisis of the Corona disaster on the early morning of the 4th of Japan time.

Depending on how the policy change is carried out in the future, its whereabouts will be the focus because it will have a great impact on the recovery of the world economy.

In March of last year, when the outbreak of the new coronavirus spread rapidly, the Fed introduced two monetary easing measures, zero interest rate policy and quantitative easing to supply a large amount of money to the market, to support the economy. I have come.

Regarding quantitative easing, the Fed will formally decide at a meeting on the 2nd and 3rd to start a response called "tapering" that will gradually reduce the funds supplied to the market.

The resumption of economic activity has improved the employment situation, and one year and eight months after the initial spread of the infection, US monetary policy will reach a turning point.

However, in the United States, the rise in prices has been prolonged due to the turmoil in the supply network and labor shortages, and the momentum of economic recovery has slowed.

In emerging economies, where the effects of the corona wreck remain, the Fed will lift the zero interest rate policy early, and monetary policy is expected to tighten, and currency depreciation has begun to progress.

In an interview with NHK, Tobias Adrian, director of the International Monetary Fund's Financial and Capital Markets, said, "The world's capital markets are heavily dependent on the dollar. There is a possibility that the price of the money will rise and the outflow of capital will cause further headwinds for the economy. "

The Fed plans to announce the results of the meeting before dawn on the 4th of Japan time, and the focus will be on the pace of policy shifts, including the timing of the cancellation of the zero interest rate policy in the future.

Be wary of “prolonged price increases” behind the decision

Behind the Fed's move to reduce the scale of quantitative easing is not only the recovery of the domestic economy, but also the caution against prolonged inflation.

In the United States, economic activity that stopped due to the corona disaster resumed, and while demand for various things recovered sharply, prices were also due to shortages of goods and labor due to the turmoil in the global supply network, and soaring crude oil prices. Is rising.

As a result, the consumer price index is in an unusual situation where the 5% level continues for five months, which is much higher than the Fed's standard of about 2%.

Last month, the 99-cent shop in Midwest Ohio and the 100-yen shop in Japan began raising product prices, including raising winter mufflers and gloves from the original 99 cents to $ 1.39.

Most of the products are imported from China, but the purchase price has soared and the cost has fallen.

It's the first time to raise the price of a product at this store, which has been in business for 26 years, and owner Nadym Karil said, "It's difficult to keep running at 99 cents. It's going to break my heart." I did.

As prices continue to rise, there is growing concern within the Fed that continued "quantitative easing" of stimulus measures could accelerate inflation, and there is increasing support for easing. I went.

Emerging market currencies depreciate Concerns about impact on economic recovery

In anticipation of a policy shift in the United States, currency depreciation is already progressing in some emerging countries, and there are concerns that the rise in prices of imported goods will have a negative impact on the recovery from the Corona disaster.

In the foreign exchange market, dollars are being bought and currencies of some emerging countries are easier to sell, and as of the 26th of last week, the rate against the dollar was 10.8% for Thai baht and Philippine peso compared to the beginning. The 5.7% and the Indian rupee are down 2.5% respectively.

The background is that there is an increasing view in the market that the US Fed will lift the zero interest rate policy and raise interest rates at an early stage after reducing quantitative easing.

If the currency depreciates further in the future, the prices of imported goods will rise for that country, which may lead to further inflation, especially in countries that rely on imports for resources such as crude oil.

Many emerging economies have been slow to recover their economies from the Corona disaster, so there is a lot of interest in how the US policy shifts and their implications.

Filipino US policy shift impact raises concerns

In some emerging economies, currency depreciation and inflation have already progressed amid slow economic recovery, raising concerns about the impact of US policy shifts.

Of these, in the Philippines in Southeast Asia, the economic recovery has been delayed due to the spread of infection, and the growth rate of the consumer price index in August increased by 4.9% compared to the same month last year, rising by 4.9% in 2 years 8 It was the highest level in a month.

In particular, the rise in food prices is conspicuous, and the rise in crude oil prices is combined with the depreciation of the domestic currency and pesos, resulting in higher fuel prices and higher transportation costs.

Prices in the fresh market in the capital Manila are 1.6 times higher than half a year ago for Chinese cabbage and double the price for broccoli half a year ago as of late last month.

Rising food prices are putting pressure on the lives of Manila citizens, and Unis Montoya, 27, who lost his job in June and lives with a friend, is also suffering from high food costs.

The daily meal cost is set at 1000 pesos for 4 people, or 2200 yen in Japanese yen, but since the food price is rising, we will reduce the number of ingredients used and eat 3 meals once made. If you do not continue, it is said that you are in a state of exceeding the budget.

"Expensive pork is like gold to us anymore. If prices go up, we have to eat less. Life is tough," said Montoya.