Euro zone policymakers like to talk. They often contradict each other at separate speaking engagements on the same day. But they have struck a chorus in recent weeks, asserting that deflation is not a threat.
The ‘taper tantrum’ of May and June, as the mid-year spike in interest rates became known, appears to have humbled Federal Reserve officials into having a second look at their convictions about the power of forward guidance on interest rate policy.
The Federal Reserve has kept its key federal funds rate at near-zero for four straight years, and it expects to keep it there for at least two more. But with each trip around the sun, outsiders wonder whether central bank policymakers will act without hesitation when the time finally comes to tighten monetary policy?
from Financial Regulatory Forum:
By Susannah Hammond
LONDON/NEW YORK , Sept. 9 (Thomson Reuters Accelus) - Almost three years on from the fall of Lehman Brothers and the widespread public bail-out of financial services the world is looking grim. In the white heat of the crisis itself jurisdictions, policymakers and governments moved together to resolve the worst of the immediate issues and bought global financial services time to heal. While some recovery and mending of balance sheets has certainly taken place, global financial services continue to suffer at the hands of divergent policymakers, international recessions and sovereign debt crises.
As we’ve noted extensively, economists often get it wrong. Leaving aside their collective failure to recognise an impending global recession, you might recall a shock interest rate hike from the Bank of England in January 2007.
Austria's Ewald Nowotny is a very busy man. Apart from running the Austrian Central Bank and sitting on the board of the European Central Bank, he has given at least 32 interviews since taking office last September, to publications as diverse as Japan's Nikkei newspaper and Austrian alternative weekly Falter as well as the usual financial papers.
The financial system is in the grips of its most violent
upheaval since the 1930s. A staggering amount of wealth has been
destroyed this year -- $11 trillion wiped out from world stock
markets in the past nine months. The damage already is spilling
into the real economy, and fears are spreading among investors
of a deep and damaging downturn.