Effectiveness of US Loose Monetary Policy Questioned

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

A big hello to our viewers across China, I'm Saijal Patel and you're watching “Asia Market Daily”.

The U.S. Federal Reserve made $80 billion last year in net profit, the highest in history.

The record result is partially due to its ultra low funding cost quantitative easing.

The Fed's loose monetary policy has been fueling inflation - and the divergence between emerging markets and developed markets has become a major global issue.

Still, Fed Chairmen Bernanke and three other Fed officials have showed renewed commitment to the 600 billion bond purchase program.

(SOT) Stephen King, Global Chief Economist at HSBC:

"There’s no doubt the Federal Reserve during QE and QE2 has been trying to boost growth and inflation in the US but actually most of the impacts have spilled out of the US and have gone through into China, into other parts of Asia and into other parts of the emerging world. So the unintended consequences of QE has been to boost inflation in the wrong parts of the world rather than the right parts of the world.”

Stephen King of HSBC says the reason for this is simple. It's because the U.S. and Europe are still struggling with huge amounts of debt, which is preventing a decent recovery from coming through.

(SOT) Stephen King, Global Chief Economist at HSBC:

In the emerging world compared with their previous history, debt levels are still very very low. Therefore they are able to respond very very easily to these very low interest rates and other sources of monetary stimulus. If the US is persistently pursuing this policy of QE, it wants, what it's trying to do is end up with a weaker dollar. So in one sense you'd want to protect yourself against the possibility or threat of a weaker dollar over the course of the next year or so.”

That's the latest “Asia Market Daily”.

I'm Saijal Patel from CNBC.

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