Breakingviews

Dangerous Fed roulette rules global markets

September 25, 2013

Central bankers claim to be predictable, so investors can see what’s coming. But last week’s surprise from the Fed showed the real rules. Markets look more like roulette, with the Fed spinning its unpredictable policy wheel – while distorting them with its printed chips.

Fed politics may just preserve Fed’s independence

September 20, 2013

Inadvertently, that may be the case. The president’s guy, Larry Summers, was torpedoed by Congress, suggesting political meddling. But if the Fed’s internal choice, Janet Yellen, gets the job, isn’t the central bank’s power maintained? It’s a messy way to the right outcome.

Bernanke is trapped by a discredited assumption

By Edward Hadas
September 19, 2013

The Fed chairman’s continued bond-buying pours fuel on market fires. The dire legacy of the last credit boom is yet to be overcome but Ben Bernanke still seems to believe he can ignore the dangerous side effects of easy money. He needs to embrace macro-prudential regulation.

Does Ben Bernanke fancy himself a Jedi knight?

July 17, 2013

The Fed chairman implied his most important duty is to ensure markets understand where monetary policy is heading. The past month has shown how hard that can be when investors hear what they want to hear. Unless Yoda he is, tapering and rate hikes will cause painful lurches.

Is Ben Bernanke wrong, or is QE impotent?

June 25, 2013

Investors are upset, but why? They might just be “feral hogs”, trying to scare the Fed into abandoning plans to tighten money. They might fear tightening now will stop a weak recovery. Or maybe they think central banks don’t have “whatever it takes” to help the economy.

Bernanke should be international man of mystery

June 20, 2013

The Fed chairman has embraced a far more communicative approach than his predecessors. The benefits, however, aren’t obvious. Based on the latest reaction in the markets, investors are parsing his comments as much as they did Alan Greenspan’s. Maybe fewer words would say more.

Fed generates the wealth, but where’s the effect?

May 31, 2013

Americans’ private worth grew twice as fast as the U.S. economy last year, due largely to the rise in stocks and other financial assets. They can thank Ben Bernanke for that. Consumers aren’t, however, rushing to spend their gains. It’s another reason to question Fed policy.

Difference between “and” and “or” could undo Fed

December 13, 2012

As well as saying it will buy more bonds, the U.S. central bank replaced its estimated duration for low interest rates with thresholds for the unemployment rate and inflation. If reality makes the two measures diverge, the new approach could prove rocky for markets.

Fed’s approach to monetary policy looks Chinese

By Edward Hadas
September 14, 2012

Critics accuse the People’s Republic of using an artificially low exchange rate to promote job creation at home. Now the U.S. central bank says it will keep on stimulating until unemployment falls. The approach is the same, but the Fed’s domestic bias carries more global risks.

Fed’s rising growth, falling inflation are wishful

April 25, 2012

The U.S. central bank sees a pick-up in growth even as the annual rise in prices declines from the current run-rate above the Fed’s 2 pct target. These trends aren’t apparent from recent data, and the Fed needs contingency plans if they don’t pan out so conveniently.