Most households and non-financial corporates in major economies "have been shrinking debt" and most banks "have much less leverage," compared with a lot of private leverages in the U.S. and Europe before the financial crisis, he said.
"Because of this combination that it's less leveraged and the growth rates are solid ... I'm less worried," he said, adding the effects of U.S. monetary tightening on the global economy will be "much less this time than the past," although some emerging market economies could face the challenge of capital outflows.
Recalling the "taper tantrum" of 2013 when former Fed Chairman Ben Bernanke first mentioned the idea of tapering the Fed's pace of asset purchases, Posen said it "was really a shock" to the markets, which sent bond yields soaring and stock prices tumbling, because "most people thought it was going to start tightening."
The European Central Bank (ECB) is likely to move in the same direction in October, setting out plans to scale back its own asset purchase program. Posen expected "there will be more market reactions" when the ECB does make that announcement, because "they haven't had the taper tantrum yet."
However, the start of Fed's balance sheet reduction in October is just the continuation of a Fed tightening cycle started in December 2017, when the central bank raised interest rates for the first time in nearly a decade. It's unlikely to shock the financial markets, he said.
【国际英语资讯:Interview: Trumps reshaping of Fed could end up with more dovish policy stance: U.S. econo】相关文章:
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