Inflation and monetary policy in developed economies: Implications
for asset markets
Developed economies are passing through a period of high inflation. Monetary authorities in Australia, New Zealand, Canada, UK, US are following tight monetary policies by raising interest rate. While preparing the assignment consider the following:
How does high interest rate affect asset market?
Are asset markets responding rationally?
Are the monetary policies in developed economies tight enough to tame inflationary pressure?
Should central banks raise interest rate further? What will happen to the asset markets in case of further interest rate increase?
You are not limited to think in the above dimensions only. You are free to include as many dimensions as you think appropriate or relevant.
You are free to choose any asset market, such as, stock market, bond market or housing market or a combination of those markets from any developed economy.
Minimum resources/skills needed to prepare this assignment
Interest rate and asset/share valuation (from corporate finance and introduction to finance)
How is interest rate determined? (Chapter 5 of Bodie et al)
Recent media news/publications
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