Daily Archives: December 3, 2009

Krishna Guha

The Fed will take asset prices into account when setting monetary policy, writes Krishna Guha of the Financial Times Read more

Krishna Guha

Congress may not share Bernanke’s vision of what the Fed should look like, writes Krishna Guha of the Financial Times
 Read more

Krishna Guha

Ben Bernanke today warned lawmakers not to strip the US Federal Reserve of the powers and independence it needs to promote growth and price stability at the start of what promised to be a contentious confirmation hearing in the Senate.

His comments came as Chris Dodd, chairman of the Senate banking committee, praised Mr Bernanke as “the right leader for this moment in our nation’s economic history” – but said he intended to pare back the Fed’s role to focus it more narrowly on monetary policy. Read more on ft.com.

Under today’s announcement, banks borrowing from the ECB’s final 12-month liquidity offering would pay a one-off interest payment, of as yet unknown value. They would adopt the loan on December 16, 2009, and pay back both principal and interest at maturity all in one go, on December 23, 2010. The indexed interest payment will be the average minimum bid rates of the 53 weekly ECB auctions over the life of the loan. And in case that isn’t clear, here’s the formula: Read more

Ralph Atkins

Jean-Claude Trichet, European Central Bank president, has just announced the next – and last – offer of unlimited 12-month liquidity will be at an interest rate linked to future changes in the main policy rate. I blogged on the attractiveness of such a move yesterday. Mr Trichet insisted the move sent no signals about a future tightening of monetary policy. More on ft.com later…

Related posts: Read more

There has been a flurry of excitement today – including at our own Alphaville – as some analysts have interpreted a Bank of England market notice on the corporate bond element of quantitative easing as the Bank feeling its way to an exit strategy.

Conspiracy theorists who expect the tail always to wag the dog can get as excited as they like. But they would be wrong. This is a mere technical modification of a tiny part of the Bank’s QE programme, consulting on the sale of corporate bonds as well as the purchase of them. Read more

Krishna Guha

Bernie Sanders, the independent senator from Vermont, has put a “hold” on Bernanke’s reconfirmation as Fed chairman. This procedural device prevents a vote of the full Senate on his nomination and can be overcome by a 60 vote supermajority.

The move is no great surprise. Holds are a common feature of life in the Senate. Sanders, a lone socialist, does not represent a larger faction in the legislature. Read more