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This way to the exit

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  • US Fed Chairman Bernanke gave some indication of future exit strategies from quantitative policy in remarks last night. He indicated that interest rates on excess reserves would be a key policy tool (effectively manipulating liquidity preference) and asset sales would not be used until very late in the process.
  • US small business confidence is due from the NFIB - the survey having been subject to some critical examination by the Fed of late. While surveys in the US have tended to overreact to underlying data recently, this is one of the few small business indicators we have to work with.
  • Warm weather kept Chinese food prices low (post lunar new year) which in turn pushed inflation lower than expected. This may keep concerns about tightening policy at bay.
  • Australian business sentiment unexpected fell to a four year low, and included weaker sentiment from the mining sector. We regard the data as something of an aberration, given recent strength in the domestic economy but it might raise some concerns amongst investors.

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