US consumers deleverage
The Federal Reserve Bank of Philadelphia launched a new consumer statistics resource today. The stats aren’t new, but they’ve put together a very readable site of Fed consumer credit and debt data.
A couple of their graphs do a great job illustrating the risks the economy still faces. Fed governors have made much of the importance of improving credit conditions (and consumer demand for credit) to the nascent economic recovery. But are we really that far below boom levels?
Not really. Read more
Non-event at the Fed next week
As I’ve suggested in recent articles, next week’s FOMC meeting should be a non-event. The committee is relaxed about ending liquidity programmes on schedule on February 1 but wants to monitor the impact of phasing out MBS purchases by March 31 before doing anything else.
Most officials think the impact on mortgage rates will be small. But they do not know for sure. Given some renewed weakness in housing they will want to confirm that their expectations are correct before taking any more steps down the exit road.
The question of what to do with the discount rate will hover in the background, but a discount rate increase looks unlikely before March at the earliest. Read more
NY Fed chief: ‘We entered the crisis with an obsolete regulatory system’
Willam C. Dudley, president of the NY Fed, today called for a systematic financial risk oversight framework, in which the Fed would play a key role.
“The financial system is simply too complex for siloed regulators to see the entire field of play, the prevent the movements of financial activity to areas where there are regulatory gaps, and, when there are difficulties to communicate and coordinate all responses in an timely and effective manner…I believe that the Federal Reserve has an essential role to play.”
And what of earlier Fed failures? Read more
Weber’s campaign
As the FT is reporting, the race to succeed Jean-Claude Trichet as European Central Bank president, is gaining momentum. Trichet does not step down until November next year, but the need to chose a new ECB vice president next month to replace Lucas Papademos is concentrating eurozone government’s minds. Germany wants the balance of power within the 22-strong ECB governing council to favour a conservative, northern European for the top position next year – that is, Axel Weber, Bundesbank president.
My view is the race is still very much open. Mr Weber has many strengths, but he is not a traditional Bundesbanker. His background is as an academic and, when asked a question, has a habit of answering it – rather than practicing the strict verbal discipline and reticence/obtuseness more normally expected at Germany’s central bank. Of course that could increase his attractiveness, but perhaps not if the search is on for hard-line inscrutability. Anyway, there is still at least a year before a decision will be made – in which time a lot could happen. Read more
Armenia’s central bank has today raised its key refinancing rate to 5.5 per cent, citing inflationary pressure. The previous rate was 5 per cent.
“Internal economic activity and external inflationary pressure on the internal market is strengthening,” the central bank said in a statement. Consumer prices in Armenia rose by 6.5 percent year-on-year in December, exceeding the upper range of the regulator’s forecast by 1 percentage point, the statement said. Read more
More diversification, more lending, decent growth, but no capital taxes. That’s the message from Alexei Ulyukayev, first deputy chairman of Russia’s central bank. (Confusingly, there seem to be three first deputies.)
Mr Ulyukayev has been busy talking to reporters today. He has announced: Read more
Eurozone bumps and imbalances
The eurozone ride gets a little scarier. Jürgen Stark, European Central Bank executive board member, warned in a speech in Leipzig this morning that growth in the first half of this year would probably be more restrained than in the final six months of 2009. Stark heads the economics department at the ECB, so his projections should be as good as anyone’s. Stark, a former Bundesbank vice president, insisted this did not mean a “double dip” recession, rather it was consistent with a gradual and bumpy (“holprigen”) recovery. But it suggests we could be in for some gloomier economic news in coming months.
More striking – to me at least - were Stark’s comments on economic imbalances within the eurozone. He devoted a large part of his speech (and a few charts) to comparing wage costs and current account deficits/surpluses across the 16-country region. Read more
Figures just out from the ONS show that both employment and unemployment are falling in the UK. How can this be?
As the diagram shows, it means the labour force is shrinking. Sometimes this can be a symptom that the working age population is falling; but that is unlikely to contribute over such a short time horizon.
It is likelier that more people are stepping out of the job market altogether. The box entitled – with hopeless grammar – “Not labour force” includes students, early retirees, people in prisons and stay-at-home parents, plus disillusioned jobseekers. A person has to be actively seeking work to be counted as unemployed. Read more
Confusion this morning over a central bank edict to further raise the reserve ratio for certain banks.
Apparently individual lenders, including Citic Bank and Everbright Bank, have been asked to curb their lending for the rest of this month. A surge of new lending in January has triggered a series of intensifying actions by authorities to rid the financial system of excess cash that can fuel inflation and asset bubbles. Last week, China’s central bank raised bank reserve requirements for the first time since June 2008. Read more
| About this blog | Blog guide |
Chris Giles has been the economics editor of the Financial Times since 2004. Based in London, he writes about international economic trends and the British economy. Before reporting economics for the Financial Times, he wrote editorials for the paper, reported for the BBC, worked as a regulator of the broadcasting industry and undertook research for the Institute for Fiscal Studies. RSS
Michael Steen, Frankfurt bureau chief, covers the ECB and the eurozone's economies. He joined the Financial Times in 2007 as Amsterdam correspondent and later worked as a front page news editor in London. Before joining the FT, he spent nine years as a correspondent at Reuters, mostly in foreign postings that included a previous stint in Frankfurt, as well as Moscow, Kiev and central Asia. He read German and Russian at Cambridge.RSS
Robin Harding is the FT's US economics editor, based in Washington. Prior to this, he was based in Tokyo, covering the Bank of Japan and Japan's technology sector, and in London as an economics leader writer. Robin studied economics at Cambridge and has a masters in economics from Hitotsubashi University, where he was a Monbusho scholar. Before joining the FT, Robin worked in asset management and banking. RSS
Ralph Atkins, capital markets editor, has been writing for the Financial Times for more than 20 years following an economics degree from Cambridge. From 2004 to 2012, Ralph was Frankfurt bureau chief, watching the European Central Bank and eurozone economies. He has also worked in Bonn, Berlin, Jerusalem and Brussels. RSS
Claire Jones is Money Supply economics team writer, based in London. Before joining the Financial Times, she was the editor of the Central Banking journal and CentralBanking.com. Claire studied philosophy and economics at the London School of Economics. RSS
Older entries
