Monetary policy: to buy or not to buy?

Investors’ attention this week shifts to the awaited policy meetings by the US Federal Reserve and the Bank of Japan, to be held respectively between today and tomorrow. Chances of a further US interest rate hike later today are slim, as Janet Yellen is widely expected to maintain a dovish tone as weak global macro-economic factors continue to stall a US recovery. The policy meeting by the Bank of Japan (BOJ) could have a larger material impact on financial markets as investors await to see how the BOJ will tackle an appreciating Yen and declining inflation expectations in an already ultra-loose monetary environment. It will surely be of interest to the European Central Bank (ECB), whose own quantitative easing (QE) measures have thus far failed to boost consumer confidence and inflation expectations across the Eurozone. Monetary policy has been in the foreground over recent years, ever since the financial meltdown of 2008. The US has been successful in reviving economic growth through the implementation of QE. The measure, although unconventional has helped flood the markets with increased money supply through government bond purchases, giving financial institutions added...