CANCUN (MEXICO) | A long time ago, in a galaxy far, far away…” the Federal Reserve did not even announce its interest rate movements. Fed watchers had to infer the lending policy of the world’s most powerful central bank just by painstakingly perusing the documents–release, obviously, in paper–of the Fed’s open market operations.
MADRID | March 24, 2015 | By J.P Marín-Arrese | On face value, Europe is recovering from a bad spell while the US is growing at an invidious rate. However, the wild currency swing may yet destabilise the global economy. Janet Yellen’s remarks on the threat of an overvalued dollar were designed to preserve a balanced performance, and indeed sparked a quick reaction in exchange rates. Yet, as the ECB unfurls its massive quantitative easing programme, volatility in the currency markets could inflict further damage.
The Corner | February 28, 2015 | The fall in oil prices may yet push the Bank of England to raise rates, which it has been keeping at 0.5% since March 2009. It currently owns the equivalent of 25% of UK’s nominal GDP (see graph above).
SAO PAULO | By Marcus Nunes via Historinhas | On December 2 2014, Stanley Fisher gave an interview (video) to Jon Hilsenrath of the WSJ. It was notable because Fischer had mostly been quiet, except for a couple of Lectures (not speeches) – here, here – given in international forums. Six or seven weeks later, is that interview still pertinent? At that point oil prices stood at close to USD 70 and now they stand below 50. Mostly as a reflection of low global AD (here).The global scenario is changing quickly, and not for the better. So maybe Fischer is not so sure anymore. [Image:WSJ]
SAO PAULO | By Marcus Nunes | As soon as you mention “market monetarist”, NGDP comes to mind. While for most the all-encompassing variable is inflation, to MMs the “target” variable is NGDP being kept at a steadily rising trend level.
MADRID | The Corner |“Yabadabadu!,” US economist Justin Wolfers exclaimed on his Twitter account. The strong jobs report (unemployment rate declined to near a six-year low of 6.1% and non-farm payrolls rose by 288,000 last month)was released on Thursday gave a shot of optimism over the strength of the job market’s recovery. The Dow broke 17,000 for the first time. Will all this have any influence on the Fed’s tapering plans?
WASHINGTON| By Pablo Pardo | The US private sector already reached the same employment figures it had before the subprime crisis started. This is one of the first solid signs of the so-called Gran Recession at the other side starting to fade. Given that the Federal Reserve has a dual mandate, including price stability as well as full employment, that suggests the still leading world economy- which could become the second after China if the World Bank’s forecast is correct- is beginning to take cruising speed.
WASHINGTON | By Pablo Pardo | Does anybody remember where the Standard and Poor’s 500 Index was five years ago? At 666. Since then, the S&P 500 has gone up a whopping 175 percent. The market has defied fiscal cliffs, Republican obstructionism, three rounds of Quantitative Easing, the start of the Fed’s ‘tapering’, the change in Chinese leadership, the euro near-collapse, a nuclear catastrophe in Japan, a wave of revolutions in the Middle East, and even a Russian invasion of Crimea.
NEW YORK | By Mike Konczal via Next New Deal | One way of judging how the economy evolved in 2013 is to compare it to the Federal Reserve’s projections of it. As some market monetarists believe, these projections aren’t neutral projections of inflation and growth but also a communication of what the Fed thinks about what it can accomplish. So, how did the Fed’s projections for 2013 turn out? Did the economy end up how the Fed said it would when it announced expanded monetary policy?
SAO PAULO | By Marcus Nunes | The Fed has never been comfortable with QE3; Many thought that QE ineffective; Bernanke felt compelled to clear the path for Yellen… But it has boosted “Forward Guidance” to make up (or more than make up) for the “taper”.