Money Supply will be running a series of Q&As on some of the more arcane but newsworthy aspects of central banking. Any suggestions for Q&As from our readers are of course welcome.
So the Federal Reserve on Wednesday will publish forecasts which will show us how long it plans to keep rates at more-or-less zero. Hasn’t it done that already?
Sort of. The voting members of the Federal Open Market Committee, which is responsible for setting interest rates, have already committed to keep rates at their current record lows until at least the middle of next year.
The move to produce interest rate forecasts however is a slightly different, slightly bolder step. Read more
And now Finland. Jyrki Katainen, the country’s prime minister, has joined calls for a northern European to be appointed to an upcoming vacancy on the European Central Bank’s six-man executive board.
As reported by the Financial Times, a north-south divide has opened up over the successor to Spain’s José Manuel González-Páramo, whose eight-year term expires at the end of May. Madrid has nominated another Spaniard as his replacement. But Luxembourg and Slovenia have put forward their own candidates, and the Netherlands has also expressed worries about the disproportionate number of southern Europeans on the board. Read more
As Greece’s largest bond holder, with a portfolio worth perhaps €40bn, the European Central Bank is watching closely the tense and protracted negotiations over losses private investors would accept voluntarily as part of a second refinancing deal for the country. Mario Draghi, ECB president, will discuss progress when eurozone finance ministers gather tonight (Monday) in Brussels.
The ECB has two objectives: first, to secure a deal that has a reasonable chance of working and, second, to avoid bearing any burden itself. Neither will be easy. Read more