Daily Archives: September 20, 2011

Claire Jones Mr Bean goes to Washington – but not Sir Mervyn

September 20, 2011 4:52 pm by Claire Jones

Sir Mervyn King is not known for his fondness for international travel, preferring to send one of his two deputies – Charlie Bean and Paul Tucker – whenever possible.

The governor, however, has traditionally made an exception for the IMF/ World Bank autumn meetings.

But, what with all the committees he is now to chair, it appears Sir Mervyn can no longer even find the time for this. The governor will not travel to Washington, though Mr Bean and Mr Tucker will both be there.

Is this a case of the governor being so busy that he can no longer find the time to attend the year’s most important gathering of financial officials? Or does Sir Mervyn view the global economic debate as so dismal that there is little point in him meeting up with his peers to try to find a solution?

 

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Posted in Bank of England |
From Gavyn Davies September 20, 2011

Gavyn Davies plans to comment after the FOMC meeting finishes.

Ben Bernanke 

Ben Bernanke. Image by Getty.

As the Fed starts its special two-day FOMC meeting today, economists are uniformly expecting a further easing in monetary policy, and markets have priced this in. It would be surprising if the Fed did not deliver. The FOMC will be mindful of the fact that US core inflation has risen in the past few months, but the majority still seems confident that this will prove temporary. Recession risks, on the other hand, would quickly return if the Fed allowed financial conditions to tighten. That will be uppermost in their minds at this meeting.

It is useful to analyse the Fed’s options by asking what it is basically trying to achieve at present. The minutes of the August FOMC meeting made it clear that the majority of members are trying to ease monetary conditions by reducing long bond yields, and thereby flattening the yield curve. The thinking is fairly straightforward. Since they cannot reduce short rates below zero, the next most obvious way of easing policy is to reduce long rates towards zero as well. That was also the purpose which lay behind QE2; the rise in the monetary base which occurred as they increased the size of their balance sheet was an incidental side effect of the policy, not its primary purpose. And it has got them into a lot of political trouble.

Continue reading: “Operation twist and shout at the Fed”

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Posted in Federal Reserve |

Claire Jones More euro bashing from the Riksbank

September 20, 2011 2:41 pm by Claire Jones

Lars Nyberg, one of the deputy governors at Sweden’s Riksbank, is a frequent critic of the eurozone authorities’ handling of the crisis. He has also been remarkably prescient.

So, what do the Riksbank’s minutes of its 6 September meeting, out today, reveal about what Mr Nyberg thinks will happen next?

Continue reading: “More euro bashing from the Riksbank”

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Posted in Riksbank |

Claire Jones How many euro area finance ministers does it take to change a light bulb?

September 20, 2011 12:26 pm by Claire Jones

Courtesy of the Irish Times:

How many euro area finance ministers does it take to change a light bulb? None – there is nothing wrong with the light bulb.

Another response doing the rounds: It’s the lightbulb’s fault and it should change itself.

 

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Posted in European Central Bank, European Union (EU) |

Chris Giles From the QB to QE

September 20, 2011 11:04 am by Chris Giles

The Bank of England’s quarterly bulletin is usually a very dull and conservative document. This quarter, it has been more widely read for its article on the impact of quantitative easing.

It is easy to quibble with the estimates, but I am not going there. More useful is the understanding it gives of what the Bank thinks the effect of QE is on growth and inflation. That way we can gain some insight of its own assessment of the transmission mechanism. The article concludes:

If we compute the range across the different estimation methods, using the middle of the ranges of the bottom-up estimates , this would suggest that QE may have raised the level of real GDP by 1.5% to 2% and increased inflation by between 0.75 to 1.5 percentage points.

These rules of thumb are, as the QB says, very uncertain. They are also very useful.

Continue reading: “From the QB to QE”

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Posted in Bank of England |

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Chris Giles 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

Ralph Atkins, Frankfurt bureau chief, has been writing about European economics and politics for the Financial Times for more than 20 years following an economics degree from Cambridge. He has been watching the European Central Bank and eurozone economies since 2004. He has previously worked in London, Bonn, Berlin, Jerusalem and Brussels. 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

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

James Politi is US economics and trade correspondent for the Financial Times, based in Washington DC. He joined the Washington bureau in January 2008 following four and a half years as US deals correspondent covering M&A and private equity. James Politi joined the FT in London in 2000 with an MSc at the London School of Economics, and undergraduate degrees from Georgetown University and the University of Florence. RSS

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