Marcus Nunes | The answer is that much more is needed, especially since lately we´ve had the Fed and the ECB/BoJ pulling in opposite directions. Some policy coordination would greatly increase their productivity.
UBS | The Bank of Japan has now fearlessly (sort of fearlessly) embraced negative interest rates. The negative rates will not be comprehensively applied in Japan, but yet another central bank has broken through zero. Rates are, or have been, negative in Japan, the Euro area, Switzerland, Sweden and Denmark. From an economic point of view what does this mean? There are good and bad aspects to negative interest rates.
Li Yuqian and Yang Gang via Caixin | The offshore yuan market in Hong Kong has been shaken to the core by weeks of volatility that analysts blame on strong intervention by China’s central bank. Wild fluctuations for yuan-based interbank lending rates as well as onshore-offshore yuan spreads in Hong Kong began in January and could continue indefinitely while the People’s Bank of China defends its currency against short sellers.
Benjamin Cole via Historinhas | In general, the “class glass” is a poor lens for analyzing U.S. politics and macroeconomic policies. To be sure, the nation has interest-group politics in spades, and groups are often well-financed.
John Bruton | Paul Mason, the economics editor of Britain’s Channel 4 News, has written Postcapitalism: A Guide to Our Future, which offers a critique of the existing global capitalist system. He points out that capitalism is only 200 years old and has gone through many changes. Economic systems do not last forever and can sometimes collapse—suddenly and painfully. There are risks that lie ahead if the defects in the global economic system are not tackled. But what’s the other option?
The FOMC statement after yesterday’s meeting failed to boost investors’ spirits. While acknowledging the US economy had faltered in the last quarter, the Fed showed no intention of switching from its current stance for the time being.
Marc Chandler via Caixin | It is fashionable to talk about currency wars. First, it was the United States who was accused of devaluing the dollar to boost exports. Then Japan with the launching of Abenomics. Now China stands accused of pushing its currency down. Is there really a currency war going on?
Today the Fed’s FOMC holds its first meeting of 2016 with 4 planned board changes. In summary, we can say that 1 hawk (hard line) will be leaving and 4 joining. This means that the balance is still in favour of the doves (soft line), but less so than in 2015.The markets will react positively if the Fed sends a clear message that it will take into account the situation of both the US and the global economy before implementing further rate hikes.
Danny Quah | For three decades now, many of the world’s most insightful observers have predicted the imminent demise of China’s system. But these same three decades have also seen China confound expectations. China’s economy turned in double-digit growth rates. China lifted 600 million people out of poverty.
Market commentators tell us that the price of Brent crude is dropping and indices like the S&P 500 and the Ibex 35 are falling. The reverse should be the case. Have we not been told that Spain has benefited from the decline in raw material prices? This cuts import prices, increases export margins, reduces pressure on wages etc. But it’s not the case. Oil prices have been tumbling for the last year, and whenever these begin start to tremble so do the stock markets.