It’s interesting to note how much of decline in the Cleveland Fed’s measure of inflation expectations came before the latest round of market turmoil.
Two of the three FOMC dissenters on Wednesday said why they broke ranks at last week’s meeting.
Aside from their view that the conditional commitment to keep rates on hold until 2013 looked suspiciously like the Fed was trying to buoy financial markets, there was another common strand to their discord.
Both Mr Fisher and Mr Plosser claimed monetary policy was limited in what it could do to spur growth. This is becoming a popular argument among senior central bankers. Read more
Gloom about eurozone economic prospects has reached the European Central Bank, with a governing council member warning of a possible “Japanese-style” period of weak growth – but also low inflation.
Comments by Ewald Nowotny, Austria’s central bank governor, in an interview with his country’s Wirtschaftsblatt, suggested that this week’s weak growth data could change the thinking at the ECB, making further interest rate rises less likely. They may fuel speculation that a cut in official borrowing costs might even become possible. Read more