Not long ago, the big debate was over who would raise rates first, the U.S. Federal Reserve or the Bank of England. Now with the Fed giving clear signals it’s on the brink of hiking and the BoE appearing to be pushing that day further off into the future, one could naturally conclude that the inflation outlook in both economies is vastly different.
Fed Chair Janet Yellen may signal later today that she is no longer patient about when to consider raising rates but any eventual hike is likely to come after June, judging by how many key economic reports so far this year have undercut expectations.
from Reuters Investigates:
Worrying about the power China has over the U.S. as America’s largest foreign creditor has become a national pastime. It’s a bipartisan issue in Congress and a favorite subject among pundits lamenting the decline in U.S. influence around the world. But could China really use its Treasury purchases to shape U.S. policy? Diplomatic cables released by WikiLeaks and obtained by Reuters suggest that has already happened.
The Federal Reserve has gone on the offensive to sell its exit strategy to investors and the public, in the hopes that it can stall an increase in inflation expectations. The effort was first launched by Fed Board Governor Kevin Warsh, who argued in a Wall Street Journal editorial, followed by a speech, that when the time came for Fed tightening, policymakers might have to move quickly. Even Bernanke, whose Great Depression expertise usually pegs him as a dove, was particularly meticulous about describing the Fed’s stimulus-withdrawal tools this week, sending the bond market into a tailspin.
Getting the U.S. consumer spending again is simple. “The government should issue every household with a debit card with an expiration limit of 90 days, and if they don’t use it, they lose it,” says Paul Kasriel, chief economist of Chicago-based Northern Trust.
from Davos Notebook:
Good session on the "Frugal American," an as yet undiscovered species that is coming to a global economy near you.