Latin America: the risks of being too attractive

October 25, 2012

Ironically, an increase of capital inflows to Latin America in the last few years due to unappealing ultralow yields in industrialized countries and the region’s relative economic success is posing a threat for development, according to a recent paper that provides wider background to BRIC criticism of the latest U.S. Federal Reserve´s quantitative easing.

Time already to switch off the sterling printing presses?

October 25, 2012

A clutch of top UK economic forecasters on Thursday swept under the rug predictions for another 50 billion pounds of gilt purchases they thought would take place starting just in a few weeks.

Housing neutral for Fed doves; Operation Twist running on empty

October 24, 2012

A slightly bigger than forecast 5.7 percent rise in sales of new homes in September reported by the National Association of Realtors on Wednesday lends credibility to September’s jump in housing starts, but appears neutral for Federal Reserve monetary policy discussions.

Deciphering the Fed: Guideposts for progress on jobs

October 24, 2012

The Federal Reserve’s open-ended bond-buying stimulus announced last month was coupled with a promise to continue purchasing assets “if the outlook for the labor market does not improve substantially.” Central bank officials are expected to continue discussing what parameters they will take into account to define such progress, but are not expected to come to any hard and fast decisions just yet.

Banks keeping most of QE3 benefits for themselves

October 17, 2012

Federal Reserve officials have been worried that their policy of ultra-low interest rates may be having less of an effect than usual because of a “broken transmission channel.” In plain English, this means the money hasn’t really been flowing smoothly from liquidity-flooded banks to would-be borrowers.

Why QE3 isn’t just for the 1 percent

October 15, 2012

During a Q&A at the Brookings Institution last week, former Fed Vice Chairman Donald Kohn asked new board member Jeremy Stein, formerly a Harvard professor, about the impression that the Fed’s quantitative easing was only helping wealthy people who benefit most from rising stocks.

Fed speak galore

October 5, 2012

The pace of Federal Reserve speeches intensifies next week, with Vice Chair Janet Yellen kicking off the calendar on Tuesday with a speech on financial stability. Yellen will be speaking in Tokyo at an IMF meeting panel. The cacophony picks up on Wednesday, with remarks from Minneapolis Fed president and recent dovish convert Narayana Kocherlakota, the board’s regulation-czar Dan Tarullo and the ever hawkish Richard Fisher from Dallas. On Thursday, Yellen will directly address monetary policy in another speech, while board governors Jeremy Stein and Sarah Raskin offer a rare peak into their macroeconomic views. Philadelphia Fed President Charles Plosser and Jim Bullard of the St.Louis Fed, both of whom have opposed QE3, are also on tap. Jeff Lacker, the lone dissenter on this year’s FOMC, will close the week on Friday.

Why the Fed shouldn’t raise rates to discipline Congress

October 1, 2012

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Federal Reserve Chairman Ben Bernanke has been trying for some time to fend off critics of his bond-buying policies who argue the central bank is making it easier for the federal government to run deficits. In remarks to the Economic Club of Indiana on Monday, he seems to have found a useful way to help illustrate his point.

Attempting to measure what QE3 will and won’t do

September 28, 2012

Deutsche Bank economists have tried to quantify what effect QE3 is likely to have on the U.S. economy. For an assumed $800 billion of purchases of both agency securities and Treasuries through the end of next year, the economy gets a little over half a percentage point lift over the course of two years and a net 500,000 jobs – or about two months’ worth of job creation in a typical strong recovery from recession.

Krugman’s legacy: Fed gets over fear of commitment

September 20, 2012

Jonathan Spicer contributed to this post

An important part of the Federal Reserve’s recent decision to embark on an open-ended quantitative easing program was a fresh indication that the central bank will leave rates low even as the recovery gains steam. According to the September policy statement: