- If rates are kept low for too long
- Monetary policy exit, when it comes, should be viewed positively
- FX and asset price overreaction to stimulus withdrawal should be transitory
- Unwinding of unconventional monetary policy should be one of the best telegraphed events in monetary history (what, you mean like forward guidance?)
- Exit from stimulus will only come on clear and convincing signs from US economy has self sustaining momentum
- Not all advanced economies will be exiting at same time
- For Canada, underlying strength of US economy as it exits should more than compensate for drag from higher rates
- Most observers believe huge capital inflows to emerging markets mainly due to attractiveness of investment, not loose monetary policy.
- Spill over effects go both ways, emerging market policies restricting capital flows contributed to crisis in first place
Just like most Canadian data his views are lagging somewhat, unless he’s calling Canada an emerging market? Inflows to EM’s ballooned when investment opportunities faded to dust in the major economies. What does he say about the sudden rush to the exits we’re now seeing?
Adam’s back in the captain’s chair so I’ll leave him to fathom out what the colonial banker is saying
