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Taper talk: EM key part of economic jigsaw
On Wednesday the Federal Reserve will reveal the extent of its tapering of asset purchases, with the market now betting on just USD10 billion.
International Monetary Fund managing director Christine Lagarde says when making its decision, the FOMC needs to carefully consider the risk of fallout in emerging economies.
"Very negative spill-over effects on the emerging market economies could very much backfire on other economies. So to assume that [the] domestic economy is totally isolated, that a country is an island, would not be the right approach.”
And Michael Ingram from BGC Partners, agrees: "The Fed is saying that everything in the US is fine and everything is on track. But it controls the global cost of capital, which has a massive impact on emerging markets.”
Some say the US monetary tightening helped trigger the latin debt crisis of the 1980s and the Asian financial crisis of the late 1990s so not surprising that many analysts are concerned about the impact Fed tapering could have on the emerging markets.
01:42 minutes
Tags: asset purchases, ben bernanke, central banks, christine lagarde, debt crisis, domestic economy, economic, economy, emerging economies, emerging markets, equities, fed, federal reserve, financial crisis, fomc, imf, international monetary fund, liquidity, michael ingram, sara walker, saxo bank, saxo tv, taper, tapering, tradingfloor.com, video