In her speech yesterday to the US Congress, Fed chair Janet Yellen made it clear that rates will remain stable over the coming months, despite concerns over China and global growth. The Fed’s monetary policy has no pre-established direction and, if it needed one, it would be adusted to meet the objectives entrusted to the institution. But the problem is that the market will demand more from the Fed.
Francesco Saraceno | FT Alphaville‘s Matthew Klein goes back to the issue of financial stability and monetary policy. A recent speech of Bank of Canada’s Timothy Lane is the occasion for Klein to reassess monetary policy before the crisis, when policy makers (in particular he refers to Ben Bernanke, but the Fed chair was in good company) dismissed fears of asset price bubbles, thus failing recognize, and to counter, the buildup of the crisis.
Two fundamental factors have affected bank lending. On the one hand, market doubts over the banks’ ability to generate margins against a backdrop of low and even negative interest rates. And on the other, the indirect impact of current energy and raw material prices on the lenders’ balance sheets.
Nick Malkoutzis via MacroPolis | For some years now, and especially over the last 12 months, Greece has acted as Europe’s lifeguard, first aid provider and gravedigger. It seems, though, that the strain of the refugee crisis means Greece’s European partners also want it to serve as a prison warden.
UBS | The current global growth scare, which has recently focused on the US, has set off a train of events that, rather implausibly, is leading to modest outperformance by EM (v. DM) equities in down markets so far this year. We explain this very simply; worries over the US economy have pulled the dollar lower and have, for now, taken some, much – needed, currency pressure off EM equity markets.
Leandro Cañibano and Felipe Herranz | The International Accounting Standards Board (IASB) has reintroduced the concept of prudence to its draft revised Conceptual Framework approved in 2015. But the scope is different from that contained in the 1989 Framework and, of course, very different from what it normally is.
In an attempt to out-macho the US and impress Germany , the ECB under Trichet decided to stamp on headline inflation hitting nearly 3% in early 2011, while core remained solidly below 2%.
BARCLAYS | We believe that uncertainty on the timing of the UK referendum on EU membership and its outcome will have a temporary negative impact on the UK’s economic activity, mostly through lower private investment. We expect growth to slow to 1.9% in 2016 from 2.2% in 2015
Yishu Zhou | The latest Forum on China-Africa Cooperation (FOCAC), held last December in Johannesburg, South Africa, was monumental for a number of reasons—not least Chinese President Xi Jinping’s unveiling of an unprecedented $60 billion development and investment deal in aid of Africa over the next three years.
Vincent Chan via Caixin | The Hong Kong dollar has been under pressure recently. On January 20, the value of the currency plunged to an eight-year low of 7.8228 to the U.S. dollar. Meanwhile, the stock market’s benchmark Hang Seng Index fell 3.8 percent from the previous day to 18,886.3, the lowest level in 42 months.