FedXinhua Headlines: U.S. Fed turns hawkish to tame inflation, posing risks to emerging markets( 二 ) asset|said|posing|policy|turns|Fed|a

Asked about whether the Fed is behind the curve on getting inflation under control, Powell said, "I think we're reacting to that now and we'll continue to adapt our policy."
"I would look at it that we're actually in position now to take the steps that we'll need to take, you know, in a thoughtful manner to address all of the issues, including that of too-high inflation," Powell told reporters.
U.S. annual inflation is expected to remain above the central bank's target of 2 percent over the next three years amid supply chain bottlenecks, rising wages and strong demand for goods and services, according to a survey recently released by the National Association for Business Economics.

文章图片

People exchange money in an exchange office in Istanbul, Turkey, Nov. 30, 2021. (Xinhua/Shadati)
RISKS TO EMERGING MARKETS
Given the prospect for a faster Fed tapering and faster rate hikes, economists at Wells Fargo Securities led by Nick Bennenbroek forecast a stronger U.S. dollar against other currencies over the next two years.
"Tighter Fed monetary policy should keep downward pressure on most emerging currencies," which are generally more sensitive to rising U.S. bond yields, the economists said Friday in an analysis.
"Part of that sensitivity stems from the fact that higher yields in the U.S. dampen the 'reach for yield' mindset. As yields in the U.S. rise, the need for investors to search for higher returns in the emerging markets may dissipate," they explained.
"In addition, rising U.S. yields often pressure government financing costs. With some emerging market sovereigns already facing precarious public finance positions, elevated financing costs could place additional pressure on debt burdens and fiscal balances across the emerging markets," the economists said.
The yield on the benchmark 10-year U.S. Treasury note retreated from around 1.7 percent in late November to 1.4 percent on Friday, but higher than 0.9 percent at the start of the year.
Some emerging market currencies, including the Brazilian real, Turkish lira and South African rand, have already suffered sharp losses against a strengthening U.S. dollar in recent months.
A faster Fed tightening could further attract capital flows toward the U.S. dollar and away from emerging markets, analysts said.

文章图片

Photo taken on Dec. 15, 2021 shows the U.S. Federal Reserve in Washington, D.C., the United States. (Photo by Ting Shen/Xinhua)
"We are already seeing capital flows to the emerging markets drying up on the expectation of higher U.S. interest rates next year," Lachman told Xinhua.
"If the Fed is forced to raise interest rates at a faster pace than presently planned, we must expect capital to be repatriated from the emerging markets. This could be problematic for many emerging market economies that have very high debt levels," Lachman said.
Non-resident portfolio flows into non-China emerging markets have turned slightly negative during the current quarter, according to the high-frequency tracking data recently released by the Washington-based Institute of International Finance.
In a research note published in June, Jasper Hoek and Emre Yoldas, economists at the Fed Board, found that financial spillovers to emerging markets from U.S. monetary policy depend on the drivers of higher yields and domestic conditions in emerging markets.
A rise in U.S. interest rates driven by favorable growth prospects is likely to have relatively benign effects on emerging financial markets, as a stronger U.S. economy would increase imports from its trading partners and boost investor confidence, the economists said.

以上关于本文的内容，仅作参考！温馨提示：如遇专业性较强的问题（如：疾病、健康、理财等），还请咨询专业人士给予相关指导!

「辽宁龙网」www.liaoninglong.com小编还为您精选了以下内容，希望对您有所帮助：