WEBVTT - Enda Curran on Intervention Warnings (Audio)

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<v Speaker 1>Let's head to Hong Kong now and join in the

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<v Speaker 1>current Bloomberg's Chief Asia Economics correspondent. Always a lot to

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<v Speaker 1>talk about with Enda, but we're looking at these intervention

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<v Speaker 1>warnings across Asia. The Bank of Korea going to buy

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<v Speaker 1>up to two point one billion dollars of sovereign debt,

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<v Speaker 1>and Indonesia and Japan, as we know, have stepped in

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<v Speaker 1>to defend their currencies to so just tell us, I

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<v Speaker 1>guess the flow on effects of the FED tightening here

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<v Speaker 1>across Asia. Yeah, we do. You seem to be in

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<v Speaker 1>a cycle now where the central banks are actively having

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<v Speaker 1>to push back and fight against markets. Like you mentioned,

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<v Speaker 1>they're either intervening to buy bond securities to keep down

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<v Speaker 1>borrowing costs, or the intervening on the in the foreign

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<v Speaker 1>exchange markets like we saw with Japan last week when

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<v Speaker 1>I intervene, the government of Japan intervened to buy its

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<v Speaker 1>own currency for the first time. Since it's not just

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<v Speaker 1>an Asia phenomenon. Of course, we've seen the big dramatic

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<v Speaker 1>news overnight with the Bank of England also having to

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<v Speaker 1>intervene and by securities that the government, the British government

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<v Speaker 1>sells there. So it's a powerful force. It's a powerful

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<v Speaker 1>pushback when you have all of these monetary monetary authorities

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<v Speaker 1>intervening markets. But does raised the question about ultimately who

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<v Speaker 1>will win here, because if you're talking about fundamentals which

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<v Speaker 1>are pointing to you know, securities moving in an ongoing

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<v Speaker 1>direction will end. The view is that just little central

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<v Speaker 1>banks can do about that, and that was one of

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<v Speaker 1>the takeaways from the PBOC job awning the PBOUC job

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<v Speaker 1>wanning last time as well. PBC comment and said, listen,

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<v Speaker 1>you can't have a one way beat against you. One

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<v Speaker 1>need direction. That's fine, but some economists were responding by saying,

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<v Speaker 1>hang on, with the FED and PBUC going in such

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<v Speaker 1>opposite directions, and with the Chinese economy in the state

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<v Speaker 1>that it is, all of that obviously means that currency

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<v Speaker 1>should be weaker and that would make it very hard

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<v Speaker 1>for the PPUC to push back. Let's just get back

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<v Speaker 1>to the Bank of England because that has been a

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<v Speaker 1>huge shock, I guess to market participants. Bank of America

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<v Speaker 1>saying that essentially this is highlighted the impossible trinity of

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<v Speaker 1>liquidity issues that are plague in global interest rate markets.

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<v Speaker 1>Do you think the BOE has has done enough and

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<v Speaker 1>what could happen next. Well, let's say obviously now during

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<v Speaker 1>a curious set of circumstances, because you have a couple

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<v Speaker 1>of things happening at once. You have the government, you know,

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<v Speaker 1>put putting more money into the economy, bringing down taxes

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<v Speaker 1>and more and and pulling levers who support growth. You

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<v Speaker 1>have the central bank raising borrowing costs in an effort

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<v Speaker 1>to bring down inflation. But now you also have the

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<v Speaker 1>central bank stepping into the financial market to bring down

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<v Speaker 1>boring costs and ensure that the market has floated with

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<v Speaker 1>liquidity and to ensure that there is a financial crisis.

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<v Speaker 1>So you have the government and the central bank pulling

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<v Speaker 1>against each other. But even within the central bank, you

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<v Speaker 1>have the central bank pulling against central bank because it's

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<v Speaker 1>doing two different things at the same time. So look,

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<v Speaker 1>it's clearly and modeled policy there at the moment. It

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<v Speaker 1>probably at the very least does suggest in the case

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<v Speaker 1>of the UK, that the Bank of England will have

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<v Speaker 1>to hike interestrates by a big amount whenever they when

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<v Speaker 1>they do meet the next sor if they decide to

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<v Speaker 1>go ahead of the meeting. Most anilests now seem to

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<v Speaker 1>be talking about maybe a big one hundred Bates points

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<v Speaker 1>hike there to try and push back against the inflation impact.

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<v Speaker 1>But as I say, rightly or wrongly, without getting into

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<v Speaker 1>the politics politics or the ideology of a policy mix,

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<v Speaker 1>the end result is that the markets are seeing it

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<v Speaker 1>as a model, they are rejecting it, and now you

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<v Speaker 1>have policy pulling in different directions and are always a pleasure,

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<v Speaker 1>Thank you and the Karen is Bloomberg's chief Asia Economics

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<v Speaker 1>correspondent with us in our Hong Kong studios