This does not look good, says David Beckworth: the US market expects aggregate demand to fall, and if the Fed does not act to stabilise the fall in spending, it will act as an effective tightening of monetary policy.
His logic? Markets’ expectations of inflation fell in the first half of this year as shown by the falling yield spread between inflation-protected and regular bonds (see chart). Productivity growth – which could have explained it – also appears to be falling. “That leaves us with one troubling possibility: the market is expecting aggregate demand to decline going forward.”
Current vice-governor Miroslav Singer will start his new role as governor of the Czech National Bank from July 1. He will replace Zdeněk Tůma, who announced in April that he would step down seven months early, saying it was best for the Bank “if the period of uncertainty connected with the changes in the Bank Board is as short as possible”.
Mr Singer has been appointed for a term of six years, and will become the third governor since the Bank’s inception in 1993. As Vice-Governor, Miroslav Singer has been overseeing the activities of the departments responsible for financial market regulation and analyses, licensing and enforcement and financial market supervision since early 2007.
Confirmation of the Bank of Japan’s $33bn loan programme were released in bank minutes today:
1. Eligible Counterparties
Financial institutions that are already counterparties in the Bank’s Funds-Supplying Operations against Pooled Collateral at All Offices and wish to be counterparties for this measure.
2. Form of Loans
Loans shall be provided against pooled collateral (the same form as the Bank’s Funds-Supplying Operations against Pooled Collateral).
3. Duration of Loans
Duration of each loan shall be 1 year, in principle, and the loan can be rolled over.