James Alexander via Historinhas | The Federal Reserve and other central banks like to see themselves as “data-dependent”. They sit in objective judgement of the facts of the economy as revealed by “data” and then portentously decide whether to attempt to alter the future facts with monetary tightening or loosening.
Disappointing job growth in May at roughly one-third of the expected figure, coupled with a downward revision for the previous two months, cast unexpected doubts on the US recovery. The labour market has slowed to half the pace seen a year ago.
BBVA Research | The latest personal income and outlays report by the BEA, which is the favourite indicator for the Federal Reserve to measure deflation, showed that income continued to expand at a solid pace (0. 4 % MoM) , while spending increased dramatically (1 % MoM) in April . The increase in income was in line with consensus expectations, while the consumer spending increase was significantly higher (consensus expectations stood at 0.7% MoM). The increase in consumer spending in April was the highest since August 2009 .
The recent disclosure of the April FOMC minutes has come as a shock. Investors expected a cautious wait-and-see stance by the Federal Reserve at that meeting. But now we discover that a majority of its members openly supported a rate hike at the June gathering, should macro-economic delivery prove reasonably upbeat.
Benjamin Cole via Historinhas | It is too bad in some regards that Richard “Inspector Clouseau” Fisher, the former president of the Federal Reserve Bank of Dallas, in no longer ensconced in that position. For one, he was always great copy. For seconds, he was one of the most infallible reverse indicators of Post War Era, and economic soothsayers could bet against a Fisherian proclamation with a rare calm.
Benjamin Cole via Historinhas | Probably, He Is Right. Among serious economists, the words “print more money” are not used, and of course the thought is sacrilege for many. Evidently, some prefer a decade or so of 20+% unemployment (see Spain, Greece), or the perennial loss of about 10% of GDP (the United States) to the idea of printing more money.
Keith Weiner via TrumanFactor | Unless you’re living under a rock, you know that we have an administered interest rate. This means that the bureaucrats at the Federal Reserve decide what’s good for the little people. Then they impose it on us. In trying to return to freedom, many people wonder why couldn’t we let the market set the interest rate. After all, we don’t have a Corn Control Agency or a Lumber Board (pun intended). So why do we have a Federal Open Market Committee? It’s a very good question.
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).