Strategists cited not only the South African situation but potential for monetary accommodation in the U.S., Europe and China.
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No amount of monetary stimulus is going to help this situation, it simply has to run its course.
It is much more likely to come a part of a monetary policy response to the dramatic deterioration of the economic situation, which will be exacerbated in the periphery by barely suppressed panic in sovereign bond markets.
Staggering annual inflation of 25% influences most daily decisions with price controls and monetary exchange restrictions trying to keep the lid on an untenable situation.
The EU debt situation shared the spotlight with China Monday as Chinese monetary authorities loosened monetary policy over the weekend by reducing reserve requirement ratios on domestic bank reserves.
The EU debt situation is also sharing the spotlight with China Monday as its monetary authorities loosened monetary policy over the weekend by reducing reserve requirement ratios on domestic bank reserves.
Monetary authorities did little to stimulate aggregate demand, because they were in a dire situation: they had driven short-term rates to near zero to fight deflation.
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These constraints set up a situation where the Federal Reserve and Treasury must consider the ramifications of their loose monetary and fiscal policies on the rest of the world.
"There has been a lot of talk about food prices at the UN, the International Monetary Fund and the World Bank, and the general feeling is we are not in the same situation we were in in 2008, " says Marc Sadler, senior agriculture economist at the World Bank.
This situation is messy and many believe it cannot be resolved without Greece being kicked out of the European monetary union.
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