A world beset with low growth and high debt burdens could do with a healthy dose of inflation. The thrust of G3 monetary policy over the past dozen years has been to mitigate deflationary risks. After pricing in a resurgence in such risks in March, markets have responded favourably to the seismic easing measures put in place since then. So, could some inflation be around the corner? Additionally, if the USD continues to weaken, it may cause inflation expectations to rise somewhat (although the cause and effect are not particularly clear at a time of weak demand). It could also add upward pressure on US interest rates eventually. This would add some degree of competitiveness to US exporters (again, not a given in present circumstances). Finally, a weaker dollar will drive a wide range of mitigating dynamics in the non-USD world.
Our September Macro Insights Livestream, we discussed
* recent developments
* the outlook for economies and markets
* DBS 3Q GDP Nowcast update for China, India, and Singapore
* Latest FX valuation readings from our currency rich-cheap monitor
* Japan after Abe
* US presidential election outlook
* Fed’s shift to average inflation targeting
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DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.