So much for the end of QE! The Bank of Japan’s announcement today that is stepping up its asset purchases is a timely reminder that not everyone has to follow the Fed. We would be wary of speculation that an outflow of Japanese money will lift bond markets elsewhere. Nonetheless, further QE in Japan should help to support equity prices worldwide and especially in the euro-zone if expectations build that the ECB will follow with full-blown QE of its own. More evidence of the diverging prospects for monetary policy should also provide an additional boost to the dollar across the board.
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