De-leveraging, deficits don’t spell ‘deflation’

- "Despite market risk aversion, we believe the Bernanke Fed has the power and will to forcibly resist deflation."
- "Even though de-leveraging among households continues, the pace of increase in saving ratios appears to be moderating, or even in some countries turning down."
- "The Fed's shifting stance is set to result in an easier global monetary policy – in Japan, we look for a more accommodative BoJ operational stance; unilateral FX intervention appears imminent."
- "In the euro area, the ECB is likely to continue with full allotments in its regular refinancings through until at least early 2011, though it appears to lack appetite to resume aggressive bond purchases."

Barclays Global Economics Weekly 20100827

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