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How Bank of Japan Will Save U.S. Investors in 2014

NEW YORK (TheStreet) -- As the Federal Reserve carries on with its steadfast tapering, many investors are bracing for a collapse in asset prices, worried they'll no longer be privy to the support of low interest rates and easy money.

However, BlackRock's San Francisco-based chief investment strategist Russ Koesterich says that actually, asset valuations will continue to rise this year, generating positive returns for investors in both the equity and fixed-income classes. BlackRock is the world's largest asset manager, overseeing more than $4.3 trillion in assets.

The drivers behind that: the Bank of Japan and the European Central Bank, because they're leaning toward maintaining aggressive monetary policies to fight Europe's mounting deflationary pressures and to ensure that Japan is out of the woods on deflation. To ward off any regression, the Bank of Japan will likely accelerate its quantitative easing program over the summer, according to Koesterich. Meanwhile, the ECB may loosen policy further.

Furthermore, the Fed itself will keep easy money flowing into the economy by anchoring short-term rates at zero throughout 2014, even if its sticks to a cutback pace of $10 billion per meeting to conclude the stimulus by year end, absent any dramatic slowdown or market shock.

"Monetary conditions will remain very loose," said Koesterich during his Tuesday phone interview with TheStreet.

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