Regional Analysis (September 23rd, 2013)
The US Federal Reserve Committee, after lowering growth projections, require more evidence of a sustained
recovery before reducing asset purchases and, confirmed a 6.5% unemployment rate as trigger of higher
short-term interest rates; Janet Yellen remains the front runner as the new Chairperson. Government wrangling over
the new Budget deficit levels further expire the Presidents political capital. Normalisation in long term interest rates
indicate perceived lower deflation risks.
Whilst the ECB see green shoots and recovery at a slow pace, they are particularly attentive and remain ready to
act to provide further liquidity. Low fertility rates and high bureaucracy continue to act as a headwind.
The Bank of Japan sees a continued moderate recovery and inflation rising gradually to the target of 2%, enabled
by purchasing Government and corporate bonds, exchange traded funds and real estate trusts. Immigration
controls need to be drastically relaxed to aid growth so taxes can reduce Government borrowing. Publicised
structural reform awaits.
The Peoples Bank of China further seeks to develop small enterprises, rural areas, consumer financing and
broaden funding for the finance sector. Excessive indebtedness, leverage, excess capacity in manufacturing and
limited natural resources are problematic. Credit restrictions were relaxed.
The Bank of England saw promising data. Interest rate increases will be considered when unemployment falls
below 7% and inflation is above 2 1/2 %. Government policy continues to promote house prices at unrealistic levels
for the majority of citizens and indicates that Labour will win the next election unless unemployment falls sharply.