Data isn’t as objective as the Fed might have you believe

April 28, 2015

SFFedTshirt.jpgFed officials say they will be “data-dependent” when it comes to making monetary policy. San Francisco Fed President John Williams feels so strongly about it, he’s even printed up a T-shirt to get that message across. But truth be told, data-dependency is not as objective as it sounds. Data doesn’t dictate policy; it’s the interpretation of data that’s key. What is rate-hike-worthy data to one policymaker is keep-the-pedal-to-the-metal data for another. Take, for instance, U.S. GDP growth. Richmond Fed President Jeffrey Lacker says he expects GDP growth to average 2 percent to 2.5 percent this year, a pace that would justify a Fed rate hike in June. Chicago Fed President Charles Evans expects 3 percent growth this year, and does not believe even that would justify a rate hike until the first half of 2016. So what does it tell you about monetary policy if you see GDP growth of 2.5 percent? Not a whole lot, judging from these two. And the statements of other Fed officials are hardly more helpful. Indeed, as Atlanta Fed President Dennis Lockhart said recently, “I don’t think it is advisable to approach such a decision with rigid quantitative triggers in mind.” Watch the data, sure. But don’t assume the data will tell you much about the exact timing of the rate hike. Monetary policy – it’s subjective. Maybe some policymaker will print that on a T-shirt.

David Cameron’s stick or twist dilemma

By Mike Peacock
April 27, 2015

Britain's opposition Labour Party leader Ed Miliband speaks at an election campaign event in north London

To a collective sigh of relief, Britain’s political parties enter their last full of week of campaigning ahead of May 7 elections. There have been endless talking points but as yet no turning point.

EU thinks again on Mediterranean operations

By Mike Peacock
April 23, 2015

Amnesty International volunteers place hundreds of ships with the writing "SOS Europe" on the beach of San Sebastian in Barcelona

EU leaders will hold an emergency summit in Brussels in response to a grimly increasing death toll among migrants trying to cross the Mediterranean from north Africa in search of a better life.

Some progress cited in Greek talks, but not enough

By Mike Peacock
April 22, 2015

Greek Finance Minister Varoufakis walks past  Eurogroup Chairman Dijsselbloem at a euro zone Finance Ministers meeting in Brussels

Euro zone finance deputies are due to hold talks today on how to rescue Greece but appear to have little concrete to work on with Athens yet to produce a new economic reform programme after the first one was declared full of holes.

Hopes of Greek Riga deal fade

By Mike Peacock
April 21, 2015

German Chancellor Merkel and Greek Prime Minister Tsipras leave after addressing news conference in Berlin

It wasn’t long ago that both Greece and the euro zone declared a reforms-for-funds deal had to be struck at a euro zone ministerial meeting in Riga on Friday to avert disaster.

BOC to hold this year? Probably not say nearly half the primary dealers

April 15, 2015

Bank of Canada Governor Poloz speaks during a Canada-UK Chamber of Commerce event in central LondonThe Bank of Canada will almost certainly hold policy steady on Wednesday but nearly half of the banks who do business directly with it predict at least one more rate cut this year.

Surprise monetary policy moves may become new norm in India

April 14, 2015

File photo of Reserve Bank of India (RBI) Governor Raghuram Rajan during a news conference in Mumbai

For all the measures India’s central bank has taken to increase transparency in policy making, predicting rate moves by Governor Raghuram Rajan is still difficult.

Greek rumour mill in overdrive

By Mike Peacock
April 14, 2015

German Chancellor Merkel and Greek Prime Minister Tsipras leave after addressing news conference in Berlin

Greece returns from its Easter break with only a few days to improve on a package of reforms that the euro zone is insisting on in return for fresh bailout money.

Emerging market stocks look more resilient to a Fed rate hike

April 9, 2015

Members of the Legio X Fretensis (Malta) re-enactment group take part in a display of ancient Roman army life at Fort Rinella in Kalkara, outside Valletta

Expectations may have been pushed to later this year for when the U.S. Federal Reserve will hike interest rates, but a repeat of another steep sell-off in emerging market stocks appears unlikely as much has already been priced in – and because of the stronger dollar.

Change in Nigeria?

By Mike Peacock
March 31, 2015

All Progressives Congresses presidential candidate and Nigeria's former military ruler Muhammodu Buhari addresses a news conference outside his house after he voted in Daura

A result in Nigeria’s close-fought election is due to be announced later. With votes from only six of 36 states uncounted, opposition contender Muhammadu Buhari has a lead of over 2.5 million votes over President Goodluck Jonathan.