Hong Kong Monetary Authority: the outlook for inflation and interest rates in the United States is still uncertain. Be vigilant.

As the Federal Reserve announced the official launch of the Taper process, reducing the rate of bond purchases by $15 billion a month, many economies around the world have made policy responses. The HKMA said on Thursday that the outlook for inflation and interest rates in the US remained uncertain and that vigilance was needed to deal with possible market volatility.

A spokesman for the HKMA said on Thursday that the Fed will continue to refer to relevant data, including the development of the US economy and the epidemic, in order to take the opportunity to reduce the pace of asset purchases and decide when to raise interest rates. Given that the US economic forecast is still uncertain, call on everyone to remain vigilant.

The spokesman also said that Hong Kong's money market continued to operate in an orderly manner, the banking system was liquid and the Hong Kong dollar exchange rate and interest rates were stable. The HKMA will continue to monitor market conditions and maintain monetary and financial stability in accordance with the linked exchange rate system.

At the same time, China International Capital Corporation, a well-known investment bank, pointed out that at present, the outside world's judgment on inflation and concerns about the issue of raising interest rates in the United States are better than expected, so the market reacted positively to this. Us stocks, especially the NASDAQ index, represented by growth stocks, rose sharply after the announcement of the interest rate decision.

At the meeting, the Fed announced that it would cut its current monthly asset purchases of $120 billion (treasury bonds 80 billion and MBS 40 billion) by 15 billion to $105 billion from late November, or 70 billion treasury bonds and 35 billion MBS in November. Then cut it by another 15 billion in December (that is, 60 billion treasury bonds and 30 billion MBS), and may cut purchases at a similar pace every month. Therefore, there is a high probability that the final end of QE will be between June and September next year. The pace is largely in line with expectations since the Fed hinted at its last meeting that it would end QE, in mid-2022.

In addition, CICC also pointed out that in view of the current slowdown in China's growth and the insufficient supply of vaccines in emerging markets, US assets and the dollar may continue to show their comparative advantage at some stage. Growth and risk-averse assets such as emerging markets and commodities lag behind, so it may be accompanied by the return of money from emerging markets to the United States and support the dollar index.