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  • » 09/18/2015, 00.00


    “Hightened concerns" about growth in China among the reasons for the Fed zero rate

    Paul Wang

    For Janet Allen, head of the Fed, China and emerging markets have uncertain outlooks. The Shanghai stock market recovered slightly despite a bad week. Skepticism about China, the US and world economy.

    Hong Kong (AsiaNews/Agencies) - The US Federal Reserve has decided not to revise the interest rate of the dollar, letting it fluctuate between 0 and 0, 25%. The rate has remained at zero since 2008, at the outbreak of the present economic crisis.

    The Fed also gave the reasons for this freeze. Janet Yellen, the Fed chairman, said yesterday that "the outlook abroad appears to have become more uncertain of late. And heightened concerns about growth in China and other emerging markets economies have led to notable volatility in financial markets."

    Until two months ago, many analysts thought the Fed would raise rates. But China's decision to devalue the yuan and the ups and downs of the Shanghai Stock Exchange have raised fears that the economy of the dragon is weakening more than the authorities confess. The devaluation of the yuan is likely to result in a series of devaluations in Asian countries and more difficulties in payments in dollars of imports, coming thus to curb US exports and the weak recovery of the US economy.

    The last time the US central bank actually raised rates was June, 2006. Yesterday’s decision extends an era of extraordinary monetary policy accommodation – which started with the subprime crisis -  during which the US central bank cut interest rates as low as possible and flooded the banking system with about US.6 trillion in cash through a series of asset-purchase programs.

    No word yet on how the Fed's decision will affect the world economy. Today, the Shanghai stock market has shown little signs of recovery (+ 0.38%), in a negative week (- 3.22%). Same for Shenzhen (+ 1.25% today), with a - 5.71 on the week.

    For some analysts, the Fed's decision will not change anything especially against a possible financial bubble in China. For others, continuing to keep a zero rate is a sign that the world situation, not only the Chinese and the US, is worrying.

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    See also

    19/12/2008 ASIA - UNITED STATES
    U.S. debt approaches insolvency; Chinese currency reserves at risk
    In a few months, America's public debt has grown to more than 100% of GDP. Fear of a valuation crisis for the dollar, with tremendous consequences for Asian countries, major exporters to the United States.

    20/11/2009 CHINA – UNITED STATES
    US Congress threatens sanctions over China’s yuan
    After Obama’s requests and the silence of China’s leaders, there is no sign that war over the value of the yuan is over. For some economists, Beijing’s monetary policy is helping the US contain inflation whilst making it easier for the world to pull itself out of the current crisis. For others, it is destroying the manufacturing capacity of the rest of the world whilst enslaving much of China’s population.

    06/05/2017 18:05:00 CHINA – UNITED STATES
    China and the US have to work together to overcome economic crises together

    The ties between the two countries have been bolstered by the 2008 economic crisis when China held onto US debt for the sake of world stability. Today, they are united by the challenges of economic reform and the resolution of international crises, starting with North Korea.

    29/12/2009 ASIA
    As the world waits for hyperinflation and a world government, Bernanke becomes “Person of the Year
    Time Magazine has made a premature choice. Economic recovery is either missing or else it is only due to spending cuts and layoffs. Unemployment in the United States and China is rising fast. A solution to the US public debt crisis can only come through hyperinflation, which will destabilise the world system.

    27/10/2008 CHINA
    China is in good shape, but must not underestimate the global crisis
    The director of China's central bank, Zhou Xiaochuan, illustrates the situation in the country and the possible strategies for addressing it. Beijing is demonstrating caution in anticipation of seeing how significantly the worldwide crisis might strike it, but is confident that it will be able to continue its rapid growth.

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