The US Federal Reserve used its recent policy meeting to surprise markets by hinting that rate increases might begin earlier than expected, in 2023 rather than in 2024. The Fed has also indicated that it is growing more optimistic about American economic growth and employment conditions. These comments prompted financial markets to rethink their expectations of monetary policy and liquidity, and the result was a sharp sell-off in emerging Asian markets as investors remembered how the former Fed chief Ben Bernanke’s similar hints in 2013 caused the “taper tantrums” which rocked Asian equity and currency markets. Although markets have stabilised since then, they remain nervous. 

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