Today’s speech by Fed chairman Ben Bernanke was a hard one to decode. A lot of the material was bland and repetitive stuff about central banks’ responsibility for financial stability; how the recession doesn’t really change the consensus on monetary policy; and how prudential rather than monetary policy is the right way to tackle asset price bubbles.
That made his comments about how one consequence of the recession will be a greater role for communication in central bank doctrine stand out all the more. Read more
Listening to Wolfgang Schäuble, German finance minister, speak in London yesterday, he was genuinely shocked by Britain’s 4.5 per cent inflation rate in August. The Weimar Republic and the 1923 hyper-inflation still looms large in the German psyche.
Just imagine what he would make of today’s rise in the consumer price inflation to 5.2 per cent, the highest rate of inflation in Britain since the early 1990s.
I have not seen his text, but I am sure Sir Mervyn King will show his Anglo-Saxon side when he makes one of his three major speeches of the year tonight and will explain why he, unlike Mr Schäuble, is not concerned about inflation’s spike. Expect to hear about VAT, energy prices and commodities and that domestically generated inflation remains very low. Sir Mervyn can say nothing else.
What else can we say about today’s inflation figures and monetary policy? Read more
Germany’s Jürgen Stark sent a tremor through financial markets when he announced his resignation from the European Central Bank’s executive board on September 9. At the time he cited “personal reasons,” but Mr Stark has just confirmed what everyone suspected – that there was much more to his decision.
He told the European Parliament on Monday that he will “very likely” make a statement at the end of this year, when he actually steps down. Expect a blast against the ECB’s government bond-buying programme – which he opposed, like many German conservatives – as well as other steps taken by central banks in Europe and beyond.
In the meantime, I couldn’t help thinking, Mr Stark might regret his decision to resign. Read more