Responding to global economic uncertainty caused by Brexit
The newspaper's correspondent in the UK, Huang Peizhao, is a reporter in the Japanese newspaper Jia Wenting.
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Cartography: Liu Hui |
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Since the United States held the referendum on the Brexit, some developed countries have launched a new round of monetary easing to cope with the global economic uncertainty caused by Brexit and ease the possible impacts and shocks. Experts believe that the reasons for the loose monetary policy promoted by central banks are different, and the stimulus effect on the economy will also be different.
United Kingdom--
For the first time in more than seven years, cut interest rates to prevent recession
The Bank of England (British central bank) announced that it has cut its benchmark interest rate from 0.5% to a historical low of 0.25%, the first rate cut since 2009.
In addition, the Bank of England also announced a package of measures to provide additional stimulus for economic growth: decided to restart a bond purchase program aimed at stimulating the economy, from the 8th of this month to buy 60 billion pounds of British government bonds, buy up to 10 billion pounds British corporate bonds have expanded the purchase of financial assets to 435 billion pounds. It is reported that the Bank of England will consider whether to continue to cut interest rates during the year, depending on the situation.
The British "Financial Times" analysis said that the British economy is slipping into recession as the Brexit referendum creates uncertainty for the global economy. The Bank of England predicts that the UK economy will not grow substantially in the second half of 2016. The Bank of England also kept its economic growth forecast at 2% this year and lowered its growth forecast for next year from 2.3% to 0.8%. Bank of England Governor Carney stressed that if the Bank of England prepares early and takes effective action, it can boost market confidence, weaken the economic slowdown, and support the necessary transformation of the British economy.
For the UK's interest rate cuts and a series of stimulus measures, most people believe that they basically meet the market expectations and economic trends after the Brexit. However, some people object to this. London financial writer Ryan wrote in Market Watch magazine that after the Brexit referendum, the pound devaluated sharply and the British government completely abandoned the fiscal austerity policy. These two phenomena are essentially equivalent to stimulating the economy. In this context, interest rates can only lead to overheating of the economy.
Japan--
Financial easing policy space is almost topping
At the monetary policy meeting held at the end of July, the Bank of Japan decided to implement an additional monetary easing policy. This is the second time that the Bank of Japan has introduced a monetary easing policy after about six months. It is also the fourth time that the Bank of Japan’s president, Kuroda, has launched an easing policy. On August 2, the Japanese cabinet passed a new round of economic stimulus plan with a total scale of 28.1 trillion yen (1 US dollar equivalent to 102 yen), which is second only to 56.8 trillion yen in 2009 and 2008. The 37 trillion yen is the third large-scale economic stimulus plan after the financial crisis. The Japanese government hopes that the new economic stimulus plan and the additional implementation of monetary easing will work together to boost the economy.
However, some analysts believe that the yen depreciation and the appreciation of the stock market brought by the Bank of Japan's large-scale monetary easing policy have reversed, corporate performance has begun to decline, personal consumption is still sluggish, and deflation risks follow. Abe hopes to use the fiscal stimulus to revive the economy, but the desire may fall again.
To ensure that the new round of economic stimulus plan can be implemented, the Japanese government will issue additional bond construction. But financial experts pointed out that this will lead to further deterioration of Japan's fiscal situation. According to Bloomberg News, Japan’s bond has hit its biggest decline in three years, and the outside world is worried that the Bank of Japan’s stimulus policy has reached its limit. Former Japanese Finance Ministry official Shinji Yoshihara also believes that the financial easing policy space dominated by Kuroda is almost at the top.
Australia--
Two rate cuts during the year to cope with low inflation
The Federal Reserve Bank of Australia (Australian Federal Reserve) recently announced that it cut its benchmark interest rate by 25 basis points to 1.5%, a record low. Economists believe that the RBA's decision to cut interest rates is in line with market expectations, given the sluggish economy, slower wage growth and the continued rise in the Australian dollar exchange rate.
The chief analyst of the Reserve Bank of Australia, Michael Bryce, believes that the decision to cut interest rates is clearly due to the consideration of inflation. At present, Australia's consumer price index has fallen to a 17-year low, and the core inflation rate is as low as 1.5%, far below the target range of 2% to 3% set by the Reserve Bank of Australia. Slow wage growth and global deflation will continue to drive down import prices, which means that the core inflation rate hopes to return to the target range by 2018 is minimal, which will push up real interest rates and reduce policy easing.
Shane Fleischer, chief analyst of a local Australian investment company, told this reporter that due to the sluggish demand for commodities from the Asian region, the Australian mining boom has gone forever, and the possibility of the RBA continuing to cut interest rates is very high in the future.
Australia's "Financial Review" website issued a document saying that while a large number of money to stimulate the economy, the RBA must be alert to the possible risks of this move, that is, the housing bubble. A drop in the benchmark interest rate to 1.5% means that the Reserve Bank of Australia has little room for conventional monetary policy, which is not conducive to building market confidence. Some people believe that the current exchange rate of the Australian dollar against the US dollar is relatively stable, and the Australian economic growth has also shown signs of improvement. The trade index has seen its first growth in the second quarter in the second quarter. At present, it should not stimulate interest rate hikes by cutting interest rates.
(The newspaper London, Tokyo, Canberra, August 8th)
â– Points
Chen Fengying (Researcher of China Modern International Relations Institute): The specific reasons for the opening of this round of loose monetary policy by many central banks around the world are different, and the effectiveness of stimulus policies will also vary.
The Bank of England’s easing policy is imperative. Recently, the Bank of England lowered the benchmark interest rate to an all-time low of 0.25% and expanded the quantitative easing scale to cope with the many effects of the referendum. According to estimates by the Bank of England, this year's business investment will be changed from the previous 2.5% positive growth to -3.75%, housing investment growth will be reduced by 1/3, import growth rate will be halved, employment growth rate will decline by 1/3, and demand growth will be sharp The decline has pushed up the unemployment rate and weakened the economic growth rate. The International Monetary Fund (IMF) lowered its economic growth forecast for the UK this year and next to 1.7% and 1.3%. In the future, the Bank of England may cut interest rates again to zero and adopt fiscal stimulus policies to deal with the negative impact of Brexit on the economy.
The Japanese stimulus policy has had little effect. Recently, the Japanese government introduced a stimulus plan totaling 28.1 trillion yen, adding the previous negative interest rate and quantitative easing policy, hoping to stimulate corporate investment and household consumption, and stimulate a weak economy. Although the stimulus plan is eye-catching and full of gimmicks, it still disappoints the market. Because of the lack of structural reforms, the impact of any stimulus on the Japanese economy is limited. What's more, this practice still uses the old routines, promises more, and less cash, but it creates new burdens for Japan's future finances. The IMF has lowered its economic growth in Japan to 0.3% and 0.1% this year and next.
Australia and other resource-rich countries are optimistic about interest rate cuts. In view of lower-than-expected inflationary pressures and weak economic growth, the Australian central bank has cut interest rates twice this year to record lows, which is in line with market expectations. At the same time, the Australian government is also equipped with a tax reduction plan, which has a better economic stimulus effect.
It is expected that the Fed will only raise interest rates at most once in the second half of the year. In addition, the prices of commodities such as oil are lower, and there is no inflationary pressure in the world. Most central banks will maintain a loose monetary policy.
People's Daily (August 09, 2016, 22nd edition)
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