T he US Fed (the US Central Bank) is the world’s most influential central bank as the US is the central economy with the US Dollar being the most popular world’s reserve currency. Therefore, the Fed’s monetary policy decisions and policy speculations affect trade and financial flows across the world. Meantime, global financial markets led by the US markets adjust frequently on various speculations by market participants over the Fed’s short-term and long-term monetary policy directions as gaged mainly from the outlook of the US inflation, unemployment and the Fed’s balance sheet composition and bet on the monetary policy cycles speculated for profit. In certain times, such speculations in fact tend to drive the Fed’s policy too. Fed’s Present Monetary Policy Stance and  the US inflation Overshoot Consequent to the Fed’s ultra-loose policies followed since March 2020 in response to the global pandemic, money printing or the Fed’s balance sheet has expanded by almost 100% to US$ ...

            T he public debt is the debt raised by the government to bridge its gap between income and expenditure. It is called the public debt as the general public has to repay it as the government is owned by the public. Depending on the maturity and repayment profile of the debt, members of the future generations also have to pay a part. As governments habitually roll over short-term debt (repay the debt by raising a new short-term debt) due to their cash flow constraints, short-term debt is also passed to future generations. Therefore, debt cannot be virtually divided between short-term and long-term. Public Debt and Inflation Hypothesis Public debt which has a long history is a topic widely consumed by Economists. Economists following Monetarist views tend always to find fault with public debt. Their core contention is about the underlying budget deficit and its adverse impact on the money supply and inflation. The bread and butter of the Moneta...

  After the independence from the British rule, Sri Lanka has been operating in the global economy at different degrees depending on the concepts of the people who managed the economy at different times. The year 1977 is considered as the landmark as open economic policies were introduced as the economic management model opening both the private sector and foreign sector to do businesses largely in a market environment. The gradual liberalization in trade and foreign exchange and the government’s withdrawal from business activities to allow the private sector to expand were the ground conditions in the new model. This was nothing but an attempt to entering the global economy for seeking comparative advantages through the evolving economic globalization for the development and upliftment of living standards of the country. Although debatable on micro details, the global economy provides the country with the opportunity to produce, consume, save, invest and employ on a wider or glo...

  The global policy wave followed by governments to curb the spread of the Corona virus by lockdowns and social distances led to severe socio-economic instabilities that disrupted the global supply chains. As a result, markets and global economy broke down creating a global depression. Therefore, global production, consumption and investments collapsed, and unemployment skyrocketed.   Although Sri Lanka could control the virus to a non-concerned level in 2020, the economy confronted a major setback due to the impact of the global depression created on the pandemic. This article highlights a macro picture of the Sri Lankan Economy 2020 by using selected key policy and economic outcome variables representing the real, fiscal, foreign and monetary sectors based on data presented in the Central Bank Annual Report 2020. However, there can be diverse analyses on the Sri Lanka Economy 2020 based on various viewpoints. Real Sector Economic Growth The economy shrank by 3.6% (real GDP g...