cheap money

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credit available at low rates of interest

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However, the positive outcomes achieved under the benefit of extraordinary monetary accommodation can mask the actual underlying risks in those asset categories.
The ratings agency's analyst, Anushka Shah, said that more monetary accommodation could endanger the economy and the banking sector.
The central bank said its monetary policy committee 'decided to normalise the degree of monetary accommodation' as the economy remains firmly on a steady growth path.
This has already prompted the world's largest central banks to announce plans to reduce the level of monetary accommodation. The US Federal Reserve plans three rate hikes in 2018 as well as a $400 bilion reduction in the size of its balance sheet.
In her press conference, her last as chair, Yellen noted that the labor market is strong with sustained job creation, ample opportunities and rising wages and poised for further gains in the months ahead but that gains will moderate over time as monetary accommodation is reduced.
It describes how the continuation of monetary accommodation in advanced economies is associated with rising asset valuations and higher leverage and how this makes the system more vulnerable to future shocks, with discussion of growth in China; the rise in household debt and implications for economic growth and financial stability, and how large credit growth creates benign conditions in the near-term but larger downside risks in the medium-term; and the connection between financial conditions and the probability distribution of future GDP growth in 21 advanced and emerging market economies.
That is not just a potential operational challenge; it also means that arithmetic alone makes markets expect a hard limit to monetary accommodation. By halving the purchase rate, the ECB has gained some time, but not removed the built-in expectation of tightening.
This involved a major shift in macroeconomic policy from fiscal relaxation and monetary accommodation to one of fiscal stringency and monetary discipline.
Third, commitment strategies, whereby monetary accommodation is not removed until either inflation or economic activity overshoots its long-run objective, are very effective in both the DSGE and FRBAJS models.
This point is illustrated with an assessment of monetary accommodation in the US since the financial crisis, and the accommodation achieved through negative interest rates in countries that have adopted these.
The bank, he insisted, "is committed to preserving the very substantial degree of monetary accommodation".
"We remain committed to preserving the very substantial degree of monetary accommodation which is necessary to secure a sustained convergence of inflation towards levels below but close to 2 per cent over the medium term."
"It's different from others, so we don't have to do what other central banks are going to do, and in order to avoid financial excess down the road, we're going to remove just a little bit of excessive monetary accommodation."
Last week, Mario Draghi, president of the European Central Bank, reiterated the threat to growth from external factors such as weak emerging markets and commodities and said monetary accommodation would be re-examined at the December meeting.
Pointing to the very low interest rate policies of the US Federal Reserve, the Bank of Japan and the Bank of England in a bid to stimulate their economies, Rajan has been warning that emerging markets are especially vulnerable to big shifts in capital flows triggered by the unprecedented monetary accommodation in rich countries.