Currency war: Free capital flows increasingly at risk as Fed policy forces Brazil into a “dirty float”

After embarking on a third round of easing last year that only involved extending the length of its zero rate policy and changing the Fed's Treasury portfolio duration mix, the Fed has recently started QE3 with an even more aggressive tone. It is now targeting the unemployment rate, communicating its commitment to accommodation even after the US economy has picked up. And to do this, it will lengthen asset maturities, buy mortgages, and extend the zero rate policy. This is very aggressive in my ...


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