MADRID | By J.P. Marin Arrese | When it comes to make a decision, a central banker is not supposed to hesitate, otherwise bewilderment and dismay will take in and lead to utter economic disarray. Mr Bernanke is bound to keep his word about tapering. And he has very little time to deliver before leaving office.
BEIJING | By Hong Hao via Caixin Magazine | The answers to how the Fed’s tapering will impact the market seem a little too obvious: the consensus is that tapering will jolt market interest rates substantially higher and thus provide headwinds for the market. Further, there is the belief that given China’s closed capital accounts, tapering will be inconsequential for its markets. I beg to differ.
By Johannes Müller (Deutsche Asset & Wealth Management) | Fed’s tapering will be the beginning of a normalization of financial markets. The U.S. central bank is beginning to lift the foot off the accelerator, but it is unlikely that Bernanke and company will imminently step on the brake.
MADRID | By Francisco López | Mark your calendars. For the first time in quite some time two major events for the future of markets and EU’s banking union are taking place in less than a month: the Fed’s meeting next Wednesday and the German elections on September 22. Is the tapering starting and by how much? Will Angela Merkel have to find a new political partner?
MADRID | By The Corner Team | Ibex 35 exceeded 9,000 points and markets were all in green this morning thanks to the withdrawal of Larry Summers as Bernanke’s substitute.
SAO PAULO | By Marcus Nunes | In a recent post John Taylor leans on Bob Hall to criticize NGDP Targeting. He goes: “In his paper at the recent Jackson Hole conference, Bob Hall criticized nominal GDP targeting, citing his 1994 paper with Greg Mankiw. Bob argues that “A policy of stabilizing nominal GDP growth would require contractionary policies to lower inflation when productivity growth is unusually high. Such a policy might easily trigger a spell at the zero lower bound.”
NEW YORK | By Ana Fuentes | Barack Obama will give six interviews to U.S. media this Monday to build public support about an intervention in Syria. The White House is using its lobbying skills to make a case for an action that for some analysts could compromise the last good economic data.
MADRID | By J.P. Marín Arrese | Christine Lagarde’s stern warning on potential problems ahead for emerging countries has been delivered in rather a blunt way: “even with the best of efforts the dam might leak”. At the annual Fed gathering in Wyoming she claimed “further lines of defence” were needed to address a financial crisis. The hike in interest rates following the prospect of a progressive tapering in asset purchases by the US, has induced a sharp reversal in fund flows between developed and emerging markets.
SAO PAULO | By Marcus Nunes | The author believes that two ‘obsessions’ are at the root of the loss in nominal stability that took place in the Bernanke Fed: the ‘obsession’ with inflation and its counterpart, the ‘obsession’ with interest rates.
BARCELONA | By CaixaBank research team | As Bernanke’s words are digested, it is inevitable that questions come up regarding whether this sequence is correct or, on the other hand, the Federal Reserve’s actions are untimely.