All the talk of currency wars is mostly just that – talk. This week’s meeting of the Group of 20 nations at the International Monetary Fund was living proof. Despite speculation that emerging nations would redouble their criticism of extraordinarily low rates in advanced economies, the G20 ended up largely supporting the Bank of Japan’s new and bold stimulus efforts aimed at combating years of deflation.
Mr. currency wars himself, Brazilian Finance Minister Guido Mantega, told reporters Japan’s monetary drive was understandable given its struggle with falling prices and stagnant wages, even if he called for close monitoring of its potential spillover effects.
Discussions about central banking are often belabored by analogies to moving vehicles, which make some sense given that interest rate policy can act both as accelerator and brake on economic activity. Perhaps tired of being in the driver’s seat, Minnesota Fed President Narayana Kocherlakota decide to switch gears and talk about clothing instead.
In an attempt to illustrate that interest rates are low because of economic conditions, not the whim of policymakers, Kocherlakota compares monetary policy to a protective jacket that needs to be worn when the weather gets rough but can slowly be removed as the summer approaches.
WASHINGTON, April 18 (Reuters) – Europe’s monetary union is
no longer in question as it was last year, French Finance
Minister Pierre Moscovici said on Thursday, even though the
continent’s economic struggles continue.
“There is still an economic crisis in Europe, it is a crisis
of insufficient growth. There is no longer a crisis of the euro
zone,” Moscovici said, adding that the European Central Bank’s
pledge to do whatever it takes to safeguard the single currency
had been a big help.
For Bank of Israel governor Stanley Fischer, this week’s high-powered macroeconomics conference at the International Monetary Fund was a homecoming of sorts. After all, he was the IMF’s first deputy managing director from 1994 to 2001. The familiar nature of his surroundings may have helped inspire Fischer to use a household analogy to describe the vaunted but often ethereal principle of central bank independence.
Fischer, a vice chairman at Citigroup between 2002 and 2005, sought to answer a question posed by conference organizers: If central banks are in charge of monetary policy, financial supervision and macroprudential policy, should we rethink central bank independence? His take: “The answer is yes.”
WASHINGTON (Reuters) – The Federal Reserve’s policy of communicating future intentions on interest rates helps support employment and economic growth, Fed Vice Chairwoman Janet Yellen said on Tuesday.
Yellen told an International Monetary Fund conference that she still believes the Fed’s stimulus efforts should be conducted within the context of a flexible inflation target, pushing back against the notion that central banks must rethink their mandates.
“Reality is sticky.” That was the core of Adam Posen’s message to German policymakers on their home turf, at a recent conference in Berlin.
What did the former UK Monetary Policy Committee member mean? Quite simply, that the types of structural economic changes that Germany has been pushing on the euro zone are not only destructive but also bound to fail, at least if history is any guide.
, April 10 (Reuters) – It is too soon for
the Federal Reserve to begin considering a tapering or halt of
its bond-buying stimulus program, Atlanta Fed President Dennis
Lockhart said on Wednesday.
“A lot of focus on that at the moment is maybe a bit
premature,” Lockhart told reporters during a press briefing on
the sidelines of an Atlanta Fed conference. “We have to wait and
watch how the data come in and see how the economy evolves.”
WASHINGTON, April 9 (Reuters) – Bank regulators need to
develop much simpler rules to make it harder for large financial
firms to game the supervisory system, Bank of England official
Andrew Haldane said on Tuesday.
“We need to do a radical pruning, simplifying of our
regulatory apparatus (that) places much less emphasis on what
are unreliable measures of risk,” Haldane, the BoE’s executive
director for financial stability, told a conference sponsored by
the Federal Reserve Bank of Atlanta.
STONE MOUNTAIN, Georgia (Reuters) – Federal Reserve Chairman Ben Bernanke said on Monday the central bank’s periodic bank stress tests have made the financial system more resilient.
Contrasting the current state of banks to their tattered condition in 2009 after the historic financial crisis, Bernanke said the sector’s rebound was positive for the broader recovery given the importance of credit to economic growth.
For all the talk about clear communications at the Federal Reserve, central bank Vice Chair Janet Yellen’s speech to the Society of American Business and Economics Writers ran a rather long-winded 16 pages.
However, while Fed board members generally do not take questions from reporters, there was a scheduled audience Q&A which, at this particular event, meant it was effectively a press briefing.