Photo: Stuck in Customs on flickr
Hong Kong is watching FOMC meeting with terror, worried about how quantitative easing will inflate local asset bubbles.Monetary Authority chief Norman Chan Tak-lam gave a three-hour presentation today about the failure of quantitative easing, and how that money is just flooding emerging markets.
He says QE2 would cause a “massive shock” for local homeowners, according to The Standard:
“The global economy is extremely abnormal and this can never last for a prolonged period,” Chan said. “There must be adjustments, potentially causing massive shocks.”
The impending monetary stimulus from the US Federal Reserve – widely expected to be outlined on Wednesday – is likely to inflate the local property bubble, he warned.
Although QE2 may be priced into the FX market, aggravation of the currency war probably isn’t. Chan predicted further easing this week by the ECB and BoJ.