Monthly Archives: April 2012

Claire Jones

The Bank of England has finally confirmed it will house its new banking regulation wing, the Prudential Regulation Authority, at 20 Moorgate (here’s a pic for those interested), a a few minutes’ walk from head office.

The Bank, keen for the PRA’s staff of 1,100 to be housed close to its Threadneedle Street headquarters in the City of London, will no doubt be pleased.

Perhaps less so the British taxpayer, left to foot the bill for a significant increase in rent.

According to research by CB Richard Ellis, a commercial property adviser, office rents in the City are more than a third higher than in Canary Wharf – the PRA’s current home – which is a 12-minute train ride away. Read more

Japan eased… the yen appreciated. The Bank of Japan may be a bit sad. Is now really the time to rub salt into wounds by reminding the BoJ of the futility of its easing actions – at least where the yen is concerned?

Nomura’s Yujiro Goto certainly thinks so (click charts to enlarge): Read more

Claire Jones

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The European Central Bank and the Reserve Bank of Australia vote on monetary policy next week.

How will the ECB react to the pain in SpainRead more

Robin Harding

The most obvious problem with the Fed’s interest rate forecasts, discussed here yesterday, is their dissonance with the FOMC statement’s forecast of exceptionally low interest rates “at least through late 2014″.

The median participant (9th of 17) thinks rates should be 1 per cent at the end of 2014 and the median voter (5th or 6th of 10) must think they should be a minimum of 0.5 per cent. The statement is a committee decision and it can reasonably be different from the median individual view. It is still confusing, though, and weakens the credibility of the statement when they look so different.

The Fed is looking at a wide range of options to tweak communications further. Some would resolve the issues with this chart – for example Mr Bernanke acknowledged the idea of identifying who made each individual forecast – while others address the broader and more important question of giving information on the Fed’s reaction function.

Here, though, are a few ways to address the simple confusion caused by the voter/non-voter divide in the rate forecast chart.  Read more

Robin Harding

There’s probably nothing that would annoy Ben Bernanke more than being caught in a logical inconsistency over some aspect of monetary policy. At the Fed’s press conference today, he vigorously defended himself against Paul Krugman’s charge that the Fed’s recent actions are inconsistent with his academic views on Japan fifteen years ago.

The Fed’s interest rate forecasts, however, are getting the bank into a real bind: Read more

Claire Jones

Bernanke at the January presser. Image by Getty.

Bernanke at the January presser. Image by Getty.

Hello and welcome to today’s live blog on Fed chairman Ben Bernanke’s press conference.

All times are London time (local time in Washington, DC is five hours behind).

This page will automatically refresh every few minutes.


20.15 This live blog is now closed.

20.10 The Fed chairman didn’t give much away there.

Launched as part of Mr Bernanke’s attempts to make monetary policy more transparent, the projections on when individual FOMC members want interest rates to rise appear to have backfired. On the evidence of this presser, they are doing more to confuse the press than clarify Fed policy. Read more

The Bank of Japan’s monetary policy decision on Friday has been powerfully talked up by analysts and officials alike, with the bank under real political pressure to satisfy market expectations and announce new easing measures that target inflation and growth.

The BoJ surprised markets on February 14 when it announced an increase in its asset-purchasing programme to Y65tn from Y55tn, and an explicit inflation target of 1 per cent. But at its last policy meeting on April 10 it decided not to implement additional monetary easing.

Now however, the bank’s officials seem desperate to talk down the yen while nearly everyone else appears content to believe they can do more than just talk.

 Read more

Britain is back in recession – gross domestic product fell by 0.2 per cent in the first quarter of this year – following a 0.3 per cent fall at the end of 2011. What should we make of the figures?

1. Is this a deep recession?

No. It is nothing like 2008-09 when output dropped 7 per cent over five quarters. In truth, as Joe Grice, chief economist of the Office for National Statistics said, the economy has been broadly flat since the third quarter of 2010. Some quarters up a bit, the others down. The level of output is now measured at an index number of 98.1 (2008=100) and it was 98.3 in the autumn of 2010. Read more

Claire Jones

Banque de France governor Christian Noyer might have failed to assure credit rating agencies that it was Britain, not France, that should see its triple-A status removed.

But in the latest issue of the French central bank’s well-respected annual Financial Stability Review, there are a series of articles that make a convincing case for the UK having returned to an era of financial repression, not seen since the decades following the second World War.

Financial repression describes a situation where governments ensure the yields on their debt are kept artificially low by encouraging domestic banks to hold their bonds, either through financial regulation or other policies which affect the cost of credit, such as monetary policy. Unsurprisingly, such “repression” tends to become more common when debt-to-GDP ratios soar.

It also might go some way to explaining why the UK has remained in the rating agencies’ good books. Read more

Ralph Atkins

Use of emergency liquidity assistance by eurozone banks could be considerably higher than previously thought. That is the conclusion I draw from a change today in European Central Bank reporting procedures.

If I am right, it could be that a bank (or several banks) somewhere in the eurozone is (are), in effect, being bailed out by national authorities. Fingers will inevitably point to Spain.

ELA is only given in the direst of circumstances, when a bank is no longer eligible to take part in regular liquidity operations, and has to be specially approved by the ECB’s 23-strong governing council in Frankfurt. Read more

Robin Harding

The FOMC meets for a two-day meeting on the 24th & 25th of April, with a decision expected as usual at 12.30pm, followed by a press conference at 2.15pm.

What to expect

Not a lot. If there are any substantive moves, I would expect them to be changes in the communications framework, rather than to existing parameters of monetary policy. Read more

What’s on the mind of billionaire Oleg Deripaska, the controlling shareholder in Rusal, the world’s biggest aluminium company? At a meeting with journalists on Friday, he talked about the outlook for the alumnium industry (cautious), the planned toughening of Russia’s enviromental rules (a game-changer), his dispute with business partner Viktor Vekselberg (almost no comment) and the long-running row at Norilsk Nickel (hostilities suspended).

But what excited Deripaska most were Russian lending rates. At 9 per cent a year and more, they are far too high, he says. And the answer is: a change in the “ridiculous” management team at the central bank.

 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

FOMC/ BoJ votes

The big events next week are the Federal Open Market Committee and Bank of Japan policy votes.

The FOMC decision, due out Wednesday afternoon DC time, is not expected to see further quantitative easing announced. However, the FT’s Gavyn Davies says this does not necessarily mean we’ve seen the last of QE from the Fed: Read more

Watching central bank hawks like a hawk.

April has seen a retrenchment of equities in each of the last two years. It threatens to happen again this year. Ashraf Laidi, chief global strategist at City Index, discusses the risks with Long View columnist John Authers: Read more

Mervyn King, Governor of the Bank of England

Mervyn King, Governor of the Bank of England

There is still more than 14 months to go before Sir Mervyn King leaves the Bank of England, but he is already in danger of appearing a lame duck as the race to succeed begins in earnest.

Today the FT reported that Mark Carney, the governor of the Bank of Canada, has been approached in relation to the job by a member of the Bank’s court, its governing body, having spoken to three people involved in the process. Mr Carney declined to comment. The Bank of Canada said the report was not accurate.

The FT also reported that the Treasury wants Charlie Bean, deputy governor for monetary policy, to remain in post after his term expires in June 2013 to provide some continuity as the top echelons of the Bank are rearranged. No one has denied this part of the story and Mr Bean has told colleagues he is willing to accept any offer to stay on for an interim period. So where do these events put the runners, the riders and those subtly touting themselves for the job. Read more

Mark Carney, governor of Canada's central bankMark Carney, the governor of Canada’s central bank, has been informally approached as a potential candidate to replace Sir Mervyn King as head of the Bank of England in June next year. One of the world’s most respected central bankers, Mr Carney, 47, now heads the Financial Stability Board, which oversees global financial regulation. He was approached recently by a member of the BoE’s court, the largely non-executive body that oversees its activities, according to three people involved in the process. Read more

From FT Alphaville

1. The central bank bashing doesn’t start and end with Bernanke.

Central banks just about everywhere make fantastic political punching bags, and the popularity of this tactic is growing. For example

FRANKFURT — As the eurozone crisis shows signs of heating up again, political leaders are once more looking to the European Central Bank for help.

Indeed they are:

François Hollande, the front-running Socialist candidate in the French presidential election, said on Monday the European Central Bank should have intervened “massively” by lending directly to eurozone countries to save Greece and counter the sovereign debt crisis.

This particular election campaign-driven episode was sparked by Nicholas Sarkozy breaking his “no ECB bashing” pact with Angela Merkel over the weekend.

Even Australia’s central bank, whose board could be forgiven for thinking they were showing admirable restraint by “taking away the punch bowl”, is being roundly beaten up by everyone from TV presenters to union leaders to, er, former political advisors for daring to wait for inflation data before deciding on an all-but-certain rate cut.

Which takes us to the next (possible) trend:

 Read more

Ralph Atkins

A spot of domestic trouble for the European Central Bank: its staff in Frankfurt are demanding protection for their pensions — against inflation.

Under current arrangements, payments for former ECB staff in retirement increase on average less than consumer prices, according to Carlos Bowles, chairman of the ECB staff committee. 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

BoE minutes

The minutes of the Monetary Policy Committee’s April meeting are out on Wednesday at 9.30am (8.30am GMT). Read more

Claire Jones

A puzzling aspect of European leaders’ fixation on fiscal profligacy is that, of the five PIIGS (ie, Portugal, Italy, Ireland, Greece and Spain), two had government debt-to-GDP ratios that were among the lowest in the eurozone. At least until the outbreak of financial turmoil in 2007.

As the chart below — taken from an article in the European Central Bank’s monthly bulletin — shows, back in 2007 both Ireland and Spain were well within the 60% debt-to-GDP limit prescribed by the Maastricht criteria. And Portugal was only a touch above it.












  Read more