Woods said that
loose monetary policy and chances for rate cuts by the US Federal Reserve have helped factors that could prevent a severe economic downturn.
Yang cited major forecast reports, which expect the rate of Consumer Price Index (CPI) inflation to hover between 0.73 percent and 1.39 percent for 2019, to say that the bank will continue to properly control the money supply through open market operations to ensure a moderately
loose monetary policy.
"While the overall low level of inflation in the EM10 can justify
loose monetary policy on domestic grounds, our analysis suggests that monetary policy appears overly loose relative to this point in the cycle", said Maxime Darmet, Associate Director, in Fitch's Economics team.
"RBI may choose to stand pat and see through the effect of the
loose monetary policy which it practiced over the last 2 years," Kapoor noted.
"Most highly developed economies, except the USA and possibly Britain, will continue to need a
loose monetary policy, but all countries in this category should comprehensively factor spillover effects into their decision-making," Lagarde said.
Together with low interest rates, this
loose monetary policy is designed to ease credit conditions and prop up the recovery.
Loose monetary policy kept many in high-risk assets too long.
However it seems that investors are finally starting to agree that
loose monetary policy can not go on forever and good economic news from the US can only really be a good thing in the long term.
Fed will maintain its current
loose monetary policy longer than expected.
London: Central banks can't expand
loose monetary policy without exacerbating risks to world economies, the Bank for International Settlements (BIS) said."Central banks cannot do 'whatever it takes' to return still-sluggish economies to strong and sustainable growth," Stephen Cecchetti, economic adviser and head of the monetary and economic department at the BIS in Basel, Switzerland, told reporters on a conference call.
Despite the positive market impact, analysts warned that the G-7 statement changed little in concrete terms, since any country could claim that its
loose monetary policy was used to help the domestic economy, not set the interest rate.