Monthly Archives: March 2012

Claire Jones

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FOMC minutes

The minutes of the Federal Open Market Committee’s mid-March meeting are out on Tuesday at 2pm in Washington, DC (8am GMT). This from the FT’s US economics editor Robin Harding on what to expect: Read more

Robin Harding

The strength of the gross domestic income in the fourth quarter of 2011 – it was up by an annualised 4.4 per cent – has been widely remarked upon. The contrast with the weaker 3 per cent growth in gross domestic product is striking.

The rise in GDI invalidates part of what Ben Bernanke said in his labour markets speech only three days ago. Mr Bernanke said (my emphasis): Read more

Claire Jones

And then there was one.

The Treasury’s report on how it (mis)handled the crisis means that, of the three tripartite authorities, only the Bank of England has yet to conduct an internal review on its performance during the turmoil.

Unsurprisingly, the governor insists such a review is unnecessary. And if Sir Mervyn King is as “amazingly stubborn” as his former opposite number in Treasury has claimed, then he’s unlikely to budge. Plus the Bank’s habit of destroying the evidence is likely to make any review rather incomplete.

The Treasury review does, however, offer some nice tidbits into where it thinks the Bank got it wrong, as well as the fraught relationship between Whitehall and Threadneedle Street.

Tellingly, the report sees Treasury’s ability to challenge the advice doled out by the new, all-powerful, Bank as vital. Hardly a signal of trust.  Read more

Claire Jones

Jens Weidmann, Bundesbank president, was in London today to give a talk at Chatham House about rebalancing Europe.

The official speech was the standard Bundesbank fare about how it wasn’t up to the surplus countries, such as Germany, to rebalance their economies by boosting domestic consumption and that the onus should instead fall on the deficit countries to enhance their competitiveness.

No surprise there then. Neither was it too much of a shock that Mr Weidmann managed to get in a dig at the Banca d’Italia, Mario Draghi’s former stomping ground — though the dig covered the “unholy marriage” between Italy’s central bank and its finance ministry from the mid 1970s until 1981, a period before Mr Draghi arrived at the Bank.

However, some juicier stuff came out in the Q&A. Read more

Claire Jones

Today the Bundesbank has leapt to the defence of the much-maligned male banker, saying that it was not them, but the women on lenders’ boards that encouraged risk taking.

This from the FT’s Frankfurt bureau chief Ralph Atkins:

Board changes at banks that result in a higher proportion of female executives “lead to a more risky conduct of business”, concluded the authors of an extensive study of German finance houses released by the country’s central bank…

…Explaining their controversial findings, based on an analysis of German bank executive teams from 1994 to 2010, the report’s authors suggest a main reason is that women executives tend to be “significantly less experienced” than male counterparts and that a lack of experience drives risk taking.

The argument that women fail to control risk because they lack experience is a bit circular surely.

But, regardless of what has happened at German lenders, a plethora of women in their upper ranks is not an excuse that central banks can rely on in explaining their policy failures. Read more

Claire Jones

Central among the Bank of England’s current concerns are fears that the recent spike in oil prices could prove more permanent than commonly thought.

This from the latest Monetary Policy Committee minutes:

A clear risk surrounded the outlook for crude oil prices. The increase on the month appeared to have been driven primarily by fears of future disruption to the supply of oil.  Any worsening of the underlying tensions in the Middle East could have significant implications for future oil prices.  And with an underlying upward trend in global demand, the risks might be more to the upside than suggested by the oil price futures curve which was used as a guide in constructing the Committee’s inflation projections.

This suggests that the Bank’s outlook is more hawkish now than is shown in its February inflation forecast. But, even if that is the case, that might not be altogether apparent from the next round of fan charts, out in May.

In fact, because of the Bank’s dogged refusal to publish some of the information underpinning its forecasts until a week after the fan charts are released, the May forecasts may well do more to mislead than inform on the MPC’s thinking. Read more

Robin Harding

Masaaki Shirakawa, the governor of the Bank of Japan, gave a subtle and interesting speech this weekend that may not have been totally comfortable for his hosts at the Federal Reserve.

Mr Shirakawa set out four problems with aggressive monetary easing in the wake of a financial crisis. These are closely mirrored in the US debate about Fed policy but on several points he took the argument further: Read more

Claire Jones

Our week ahead email helps you to track the most important events in central banking. To see all of our emails and alerts visit

Bernanke on the labour market

Ben Bernanke delivers the two final talks in his four-part lecture series to college students on the Federal Reserve and the financial crisis.

What will be of more interest to markets, however, will be the Fed chairman’s talk on Monday on recent developments in the US labour market. This from the FT’s US economics editor Robin Harding on what to expect:

 Read more

Claire Jones

Obama’s World Bank nominee Jim Yong Kim is a man of many talents… (Mr Kim’s attempt to be the next Kelly Clarkson begins two minutes in). Read more

Ralph Atkins

Germany’s conservative “awkward squad” — willing to criticise publicly the European Central Bank — has a new member. Jürgen Stark, who quit the ECB’s executive board last year, has voiced alarm at the inflationary consequences of its actions to save the eurozone and warned the global financial system is “on drugs”.

The former Bundesbank vice-president’s comments are given expansive treatment in Handelsblatt, the business newspaper — they are spread over six tabloid pages. Two points struck me as novel. Read more