Statement Big Twenty lacks firmness

Statement Big Twenty lacks firmness

As we expected, the meeting Big Twenty in Shanghai ended without tangible results. Despite the growth of the world economy risks, the ability to find consensus has become an insurmountable barrier for the moment. In addition, the opposition in respect of the right of action highlighted statements Germany Finance Minister Volfganga Shoyble that “fiscal and monetary policies have reached their limits,” limit the possibility of the effectiveness of the meeting. Expectations about some coordinated response, which could include at exchange rates or extraordinary stimulus plan measures did not materialize. Failure to reach agreement on a new fiscal and monetary measures has disappointed investors, so trading moved into risk aversion mode. The US dollar was also supported as a result of better than expected data from the US and revaluation upwards increasing the likelihood the Fed rate. Carefully worded but toothless statement Big Twenty sounded: “We will use all policy tools – monetary, fiscal and structural – individually and collectively” to “strengthen global demand and boost market confidence.” However, no details of potential policy responses to this declaration no one paid attention. The emphasis on the use of all policy instruments shows that monetary policy can not be the only strategy of the central bank. In a statement, the group reiterated its previous statements regarding the currency markets ( “refrain from competitive devaluations … we will not program our exchange rates for competitive purposes”). The statement also reaffirmed the need to “close consultation” to reduce “excess volatility and uncoordinated movements in exchange rates.” Perhaps the most interesting and important results statement Big Twenty was a warning that the release of the UK from the EU would be “shock” to the global economy. Initially, this statement was seen as a powerful support voting for continued membership in the EU. However, news that British officials have made it a warning about leaving the UK may slightly reduce the credibility of this statement. We reserve the depreciation of the pound and the forecast will hold short positions in the pound-dollar pair with recovery rally.

Related posts

Next posts

Leave a Reply

Your email address will not be published. Required fields are marked *