The impact of QE2 on emerging markets

Boom and bust

federal-reserve-hq
Federal Reserve HQ in Washington DC

The second round of quantitative easing now being implemented by the US Federal Reserve is leading to a sharp divide between developed countries, which are pushing for accommodative fiscal and monetary policies to avert disinflationary trends, and emerging market countries, which are currently under pressure to control already high inflation.

The new quantitative easing, known as QE2, will create significant amounts of liquidity in the financial system, and this will need to find a home. If the

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