Economic & Monetary Policy Essay Example | Topics and Well Written Essays - 750 words

Economic & Monetary Policy - Essay ExampleSteel prices rent been found to have fallen of a cliff, an indication of weakening demand generally. chinas result had been to try and prop up the economy by a host of measures, including reducing reserve requirements for banks and penetrative interest rates in 2014, all moves that no doubt are meant to encourage lending and to prodding growth by providing liquidity to the commercialize (Wildau, 2015 Roach, 2014). At the same time, the government has moved to tweak the plus holdings levels of banks in order to allow for banks to shore up its own lending portfolio and allow property developers, unremarkable consumers, and a host of government corporations to avail of liquidity to finance purchases and investments, as well as bestow repayments. The problem being foreseen is that as the liquidity levels grow, so do pressures on the interest rates downward, and so do the pressures on the currency to devalue, as more liquidity translates to a cheaper currency due to its great availability. There re concerns that such moves may not work s China intended, because from experience last(prenominal) moves to inject liquidity resulted in the use of such new money to finance activities related to speculating on property and taking bets on the stock market, rather than for the purposes of expanding production and investing in real detonator expenditure projects that drive growth in the long term (Deng et al., 2014 The Economist Newspaper Limited, 2014). The opinion from the market is that China should do more to shore up the economy by ensuring a fundamental faux pas away from a reliance on loans to finance growth, and a reliance on exports, towards making domestic help consumption a bigger driver of growth (Reuters, 2015 Bradsher, 2015 Fernald et al., 2014).In Japan the conditions are different from Chinas in terms of the problems of the economy and the monetary policies that have been instituted