Daily Archives: October 22, 2012

Robin Harding

This month’s FOMC is likely to produce little visible action but there is a lot going on under the surface. The meeting starts tomorrow, Tuesday, October 23, and should conclude with a policy statement around 12.30 ET on Wednesday, the 24th.

What to expect?

Not much new. QE3 has just begun, Operation Twist 2 is ongoing, and for reasons discussed below, it is probably (although not definitely) too early for communication changes.

The FOMC may want to make slight updates to its statement noting some mildly positive economic data. It might strike a more positive tone on housing, but given that QE3 is tied to the labour market, any change to “growth in employment has been slow” is likely to be cosmetic.

Consensus forecasts

The FOMC is set to discuss consensus committee forecasts on day one. This is not as sexy as QE – it won’t move the markets – but is profoundly important to the future of the Fed. It will affect policy down the line. 

Claire Jones

Erkki Liikanen, governor of Finland’s central bank and author of the eponymous review into the structure of Europe’s banks, appeared before UK lawmakers on Monday as part of parliament’s commission on banking standards.

There wasn’t much new information on the Liikanen proposals, which require some aspects of trading activity to be separated from banks’ deposit-taking operations.

But there was an interesting spat between a cantankerous Lord Lawson, the former chancellor of the exchequer who sits on the commission, and Mr Liikanen.