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Monetary policy to remain loose even with Fed tapering

Our research has consistently emphasised that monetary conditions in the major advanced economies are likely to remain exceptionally loose for several years even after the US Fed ends its asset purchases under QE3. The consensus has now swung around to this position, for the most part, but three points are worth reiterating. After all, in recent weeks the markets have once again shown themselves liable to react strongly to central bank statements that, on closer inspection, say nothing new.

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