Monthly Archives: April 2012

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. 

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.

 

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 www.ft.com/nbe

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: 

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: 

Chris Giles

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. 

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. 

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:

 

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. 

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 www.ft.com/nbe

BoE minutes

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

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.