“We think Fed’s action could aversely impact China’s bias to ease, at the margin,” Citigroup Global Markets Asia-Pacific Chief Economist Johanna Chua wrote in a report dated today. “We think this has marginally reduced the odds of easing for a number of countries largely due to rising inflation expectations, especially among central banks that have been somewhat neutral to hawkish.”
China’s former banking chief called the Fed’s third round of quantitative easing “irresponsible,” while an official at the regulator said the stimulus won’t provide sustained support to the U.S. economy.
“It’s irresponsible to the U.S., and also irresponsible to us,” Liu Mingkang, former chairman of the China Banking Regulatory Commission, told Bloomberg News at a conference in Beijing on Sept. 15. He declined to elaborate. The measures are more likely to boost growth “for a period” of time than provide longer-term support, Yan Qingmin, assistant chairman of the CBRC, said Sept. 15. — Bloomberg
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And thus begins the unintended consequences.
Is the U.S. using QE as an economic/military weapon to keep China’s restlessness in the South China Sea under control? The more money the Fed prints, the higher inflation expectations become, which could result in instability in the communist nation due to stagflation.