When the top financial bigwigs from the Group of 20 industrialized and developing countries got together in the U.S. last April, Bank of Japan Gov. Haruhiko Kuroda came under the heat lamp with some of the developing countries who complained his policies could upend their economies.
Federal Reserve. During working-level discussions by G-20 policymakers in recent weeks, most of the attention has focused on the Fed’s plan to taper off its loose money program, a G-20 official told JRT recently.
The debate “became liveliest” when it came to an exit from the Fed’s easy money policy, the official said of the talks that took place about two weeks ago.
While the participants from emerging nations didn’t exactly call on the U.S. to change its plans, they did ask it to minimize the impact on their economies, including that from capital outflows, the official said.
Such behind-the-scenes discussions point to a sharp shift in what is going on in the global economy, and in the debate over monetary policy.
Until not too long ago, emerging countries complained their currencies had risen too much because of all the money coming out of advanced countries whose central banks were printing so much to get their own economies moving.
As the main architect of Japan’s easing, Mr. Kuroda was one of the prime targets of such gripes. But on June 19, things changed. That was when Fed Chairman Ben Bernanke triggered a sharp reversal in money flows by outlining the Fed’s plan to wind down its easy money program.
As a result, Brazil–one of the loudest critics of the Fed’s policy for pushing up its currency, the real, too much–is now intervening in the market to keep it from falling too fast. Amid the turmoil unleashed by Mr. Bernanke, emerging economies have become rather quiet about the BOJ.
Instead, G-20 members now seem to look to Japan to prop up the global economy. Indeed, the International Monetary Fund’s latest outlook report cites Japan as one of the few bright spots.
While the IMF cut the global growth forecast for this year and next by 0.2 percentage point from its previous assessment in April–to 3.1% and 3.8% respectively–it raised Japan’s forecast for this year by half a point to 2%, thanks largely to Mr. Kuroda’s easing steps.
Yet with Japan’s public debt nearing an unprecedented two-and-half times the size of the economy, no G-20 nation hopes Japan will increase spending, the G-20 official said.
Rather, most pin their hopes on Prime Minister Shinzo Abe’s promises of structural reforms. While short on details, such promises have got the attention of foreign authorities who believe they could produce sustainable growth, he said.
wsj.com
Federal Reserve. During working-level discussions by G-20 policymakers in recent weeks, most of the attention has focused on the Fed’s plan to taper off its loose money program, a G-20 official told JRT recently.
The debate “became liveliest” when it came to an exit from the Fed’s easy money policy, the official said of the talks that took place about two weeks ago.
While the participants from emerging nations didn’t exactly call on the U.S. to change its plans, they did ask it to minimize the impact on their economies, including that from capital outflows, the official said.
Such behind-the-scenes discussions point to a sharp shift in what is going on in the global economy, and in the debate over monetary policy.
Until not too long ago, emerging countries complained their currencies had risen too much because of all the money coming out of advanced countries whose central banks were printing so much to get their own economies moving.
As the main architect of Japan’s easing, Mr. Kuroda was one of the prime targets of such gripes. But on June 19, things changed. That was when Fed Chairman Ben Bernanke triggered a sharp reversal in money flows by outlining the Fed’s plan to wind down its easy money program.
As a result, Brazil–one of the loudest critics of the Fed’s policy for pushing up its currency, the real, too much–is now intervening in the market to keep it from falling too fast. Amid the turmoil unleashed by Mr. Bernanke, emerging economies have become rather quiet about the BOJ.
Instead, G-20 members now seem to look to Japan to prop up the global economy. Indeed, the International Monetary Fund’s latest outlook report cites Japan as one of the few bright spots.
While the IMF cut the global growth forecast for this year and next by 0.2 percentage point from its previous assessment in April–to 3.1% and 3.8% respectively–it raised Japan’s forecast for this year by half a point to 2%, thanks largely to Mr. Kuroda’s easing steps.
Yet with Japan’s public debt nearing an unprecedented two-and-half times the size of the economy, no G-20 nation hopes Japan will increase spending, the G-20 official said.
Rather, most pin their hopes on Prime Minister Shinzo Abe’s promises of structural reforms. While short on details, such promises have got the attention of foreign authorities who believe they could produce sustainable growth, he said.
wsj.com
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