More problems, more money

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The SNB took steps to weaken the CHF last night, and the BoJ intervened to weaken the JPY this morning.

I think the BoE and Fed are next.

It will be interesting to see if this leads to more Asian and commodity price inflation. This is going to make life difficult for the RBA.


  1. The opposite I’d say… they are trying (!) to buy and appreciate the USD which will bring down USD commodity prices (oil). If you are pegged to USD, commodities (oil) should get cheaper. Should be neutral for Australia with floating exchange rate… we’ll see :)

    1. I suspect the RBA will be stoked if they can get away with keeping rates on hold for the next year or so – until the increase in mining investment really gets cracking. Once they see that, and see if it does push up inflation as they expect, they can legitimately talk about a peak and the opportunities for easier policy. Having spoke about it for a few years now, i think it is hard for them to back out of this mining boom story before it really gets going.

      A crisis is their most dignified exit strategy.

      Sent from my iPad

      1. I see iron ore is bucking the trend and still rising. The MacroBusiness boys suggest that’s because…

        It’s either lingering faith that China can stay clear of the slowdown or a moral hazard play on China boosting its infrastructure spend to do just that

        There’s little doubt that if Europe and the US go into recession again (did the last one ever really end?) the Chinese will open the credit taps again and fire up another manic investment boom. They really don’t know what else to do. You don’t build a consumer economy overnight.

  2. the USA is clearly heading down after the absurd debt ceiling deal, Europe is the same way as Austerity works in the way everybody knows it does and Japan is still stuffed.

    Combine this with the problems that have been outlined about the last CPI and I can certainly see why they left rates on hold

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