Markets may be looking to Japan's central bank to goose the economy, but easing may have reached its limits, with the next phase in corporate hands.
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Geoffrey Yu, FX strategist at UBS, says the market is over-expectant about the possibility that the Bank of Japan will introduce more aggressive easing.
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The Bank of Japan will probably stand pat on policy on Wednesday but may debate more easing if it feels that global recession fears and volatile markets pose such a threat to the country's economic recovery that it warrants additional monetary stimulus.
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Goldman Sachs on Wednesday reviewed its position on further monetary stimulus, saying that further quantitative easing had a greater than ever chance of being implemented in the United States.
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Kathy Lien, Director of Currency Research at Global Forex Trading (GFT), says the ECB has three options now: 1) Resume their asset purchases, 2) Change the extended period language of the statement and 3) Lower the interest rate.
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Japan primed financial markets on Tuesday for currency intervention after the yen tested record highs overnight, signalling it may try to tame the unit with a combination of yen-selling and monetary easing.
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How does QE differ from normal federal reserve open market operations? Also, how does US quantitative easing differ from Japan’s quantitative easing program? Salman Khan of the Khan Academy explains the finer points of quantitative easing.
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Interest rates are heading lower, counter to what many in the bond market thought might happen as the Fed reaches the end of its quantitative easing program.
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