Nomura Economist: Europe And America Or Slide Into QE Trap

Nomura economists told CNBC on Friday that the problem of the massive QE project of the central bank is that if consumers and businesses fail to stimulate growth through loans, the policy will prove useless.

The United States and Britain began to implement QE after the 2007-2008 global financial crisis. Japan joined the QE camp in 2013. The European Central Bank started implementing the euro one trillion QE plan this week.

Richard Koo, chief economist of Nomura Research Institute, said: " U.S.A And Europe is facing the same problem. Private enterprises do not borrow money in a zero interest rate environment. When no one borrows money, monetary policy is largely useless.

In the QE implementation of the European Central Bank, data from last month showed that private enterprises and family loans decreased by 0.1% in January compared with 0.5% in December.

According to Koo, because Monetary stimulus The reserves of major central banks are much higher than necessary. This did not cause growth in private sector spending, because large companies were struggling to cope with a balance sheet recession, and companies wanted to reduce their debt burden instead of spending or investing, which triggered the risk of slipping into the QE trap.

"In an economy, if someone deposits, you need someone," Koo said. loan What's missing is loans. The central bank is releasing a lot of money, but there is no demand. We see negative interest rates and all these distortions. "

He added that the Fed should first focus on reducing its balance sheet, which now exceeds $4 trillion, rather than raising interest rates. He said: "Fed officials do not rush to raise interest rates. When people are not worried about inflation, they should reduce their balance sheets."

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Beijing time on March 14th morning, the U.S. stock market fell on Friday, the US February production price index (PPI) data significantly lower than expected, consumer confidence index is also less than expected, so that the U.S. economic outlook is overshadowed. Next Tuesday, the Federal Reserve will hold a two day monetary policy meeting, and investors will speculate on the timing and scope of raising interest rates.

The Dow Jones Industrial Average fell 145.97 points to 17749.25 points, or 0.82%, while the Nasdaq composite index dropped 21.53 points to 4871.76 points, or 0.44%, while the standard & Poor's 500 index dropped 12.55 points to 2053.40 points, or 0.61%. The vast majority of plates fell, and raw materials and utility plates led to decline.

This week, the Dow Jones Industrial Average fell 0.6%, the S & P 500 index fell 0.9%, and the NASDAQ index dropped 1.1%.

Next Tuesday and Wednesday, the Federal Open Market Committee (FOMC) of the Federal Reserve will hold a monetary policy conference. Although the market is not expected to adjust interest rates at this meeting, investors will pay close attention to the news conference after the meeting of the chairman of the Federal Reserve, Yellen, to find out how much patience the central bank's Federal Reserve will maintain before tightening policy.

In terms of economic data, the US PPI fell for second consecutive months, indicating that inflation in the US is still in the doldrums, and the prospect of further interest rates is being shaded.

The core PPI of the US after excluding food and energy in February has shrunk by 0.5%, far below the expected growth rate of 0.1%, the biggest decline since 2009. PPI fell 0.6% year-on-year, the first contraction since record.

The US consumer confidence index of University of Michigan in March was 91.2, 95.5, 95.4.

The US University of Michigan March expected index initial value 83.7, the former value 88.0.

In March, the University of Michigan's current state index was 103, with a value of 106.9.

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