New York Times (November 4)
Fed Chairman Jerome Powell announced a tapering of stimulus programs, but he did not “lay the groundwork for higher rates.” That doesn’t mean “the era of near-zero rates will last anything close to as long as it did after the global financial crisis,” but if the current inflation surge “proves something other than temporary, Mr. Powell’s decision to stick to his guns” on interest rates “will loom as a missed moment to join other English-speaking countries in using monetary policy to try to stamp it out.”
Tags: Fed, Global financial crisis, Inflation, Interest, Monetary policy, Near-zero, Powell, Rates, Stimulus, Surge, Tapering
MarketWatch (July 13)
“U.S. stock indexes on Tuesday morning edged slightly lower from Monday’s record closes, as investors assessed a hotter-than-expected consumer inflation report for June, which suggests to some that the Federal Reserve may need to consider removing some of its monetary policy measures to avoid an overheated post-COVID economy.”
Tags: Consumer inflation, Economy, Fed, Investors, June, Monetary policy, Overheated, Post-Covid, Record closes, Stock, U.S.
Reuters (April 29)
“There’s an end to everything except, apparently, central bankers’ creativity. Virus-damaged economies will need lots of help to heal, and more downturns are inevitable in the future. The monetary-policy bigwigs will keep coming up with more new ways to stimulate growth.” The Fed and BoE may “eventually overcome their aversion to negative interest rates” and/or “copy Bank of Japan chief Haruhiko Kuroda’s yield-curve control policy of targeting specific levels for 10-year government bond yields.”
Tags: BOE, BOJ, Creativity, Damaged, Downturns, Economies, Fed, Growth, Heal, Kuroda, Monetary policy, Negative interest, Virus, Yield curve
Investment Week (November 18)
The Fed’s “180-degree policy U-turn…from tightening to loosening interest rates” has “increased uncertainty about monetary policy.” Another factor exacerbating matters is “the unpredictable and escalating trade war between the US and China.” Combined, they have “resulted in a higher frequency of volatility spikes and some violent sector rotation.”
Tags: China, Fed, Interest rates, Loosening, Monetary policy, Tightening, Trade war, U-turn, U.S., Uncertainty, Unpredictable, Volatility
Bloomberg (October 17)
“The IMF estimates that the U.S.-China trade war has shaved 0.8 percentage points off global growth,” but “the costs of tariffs could prove higher than just an economic slowdown.” The largely neglected threat is that the “slowdown, combined with a decade of ultra-loose monetary policy, could cause a wave of defaults among corporations. This double whammy could threaten the world’s financial stability.”
Tags: China, Costs, Defaults Financial stability, Global growth, IMF, Monetary policy, Slowdown, Tariffs, Trade war, U.S.
Washington Post (August 2)
“China’s state-driven economic model has created many problems. Monetary policy isn’t one of them.” On the heels of the Fed’s rate cut, the ECB “looks poised to follow suit in September” and “the temptation is high for other central banks to fall in line.” But often they’re “canceling out each other’s efforts,” which is one reason the dollar didn’t fall with the latest rate cut. “Developed nations play out what is a zero-sum game.” In the process, they’re “using up the ammunition they have available to support their economies in the event of a downturn.” In contrast, the PBOC has avoided playing the rate cut game and “China’s 10-year government bond yield is relatively unchanged since the end of 2018.”
Tags: Canceling out, China Economic model, Developed nations, Dollar, Downturn, ECB, Fed, Monetary policy, PBOC, Rate cut, Temptation, Zero-sum game
Nikkei (May 19)
“Japan’s economy” looks “on course for a major downturn,” based on a survey of about 1,300 economists. “Should China’s stimulus take hold, concerns about a worsening Japanese economy may be washed away. Yet Japan is constrained not only in its monetary policy, but also in its fiscal leeway considering the heavy government debt load,” not to mention the need for major employment and social security reforms.
Tags: China, Debt load, Downturn, Economists, Economy, Employment. Social security, Government, Japan, Monetary policy, Reforms, Stimulus
Reuters (July 29)
“The Bank of Japan meets on Tuesday and might be doing some ‘jinarashi’ i.e. preparing markets for some changes to its unique, ultra-loose monetary policy.” With five years of mixed results, as well as “a global trade war now threatening trouble for its big exporters and zero interest rates hurting its banks, the BOJ seems to have recognized that something needs to give.”
Tags: BOJ, Exporters, Global trade war, Japan, Jinarashi, Mixed results, Monetary policy, Ultra-loose, Zero interest rates
Investment Week (November)
The recent 0.25% increase “in interest rates announced by the Bank of England leaves us with no more clarity about the direction of monetary policy than we had before the micro-adjustment. Indeed, the increase raises rather more questions than it resolves.” The cut may simply reverse “the rather ill-judged post referendum cut,” Or it could be one off “nod to those worried about inflation becoming more embedded.” Or it could be “the start of a sequence that will see regular increases in rates along a path towards normalisation.”
Tags: Adjustment, BOE, Clarity, Direction, Inflation, Interest rates, Monetary policy, Normalisation, Referendum
Bloomberg (November 10)
The Bank of Japan (BoJ) proved no match for the zero lower bound. “The Bank of Japan’s recent quarterly report says, in effect, that the central bank has done all it can do to raise growth and inflation, and that fiscal policy needs to step in and help.” The BoJ already “owns more than half of the ETF shares in the whole country” and is estimated to soon “be the biggest shareholder in 55 of the 225 companies in the Nikkei index.” Other central banks will follow Japan’s retreat. “The era of bold monetary policy experimentation that began with the global financial crisis is now drawing to a close.”
Tags: BOJ, Central banks, ETF, Fiscal policy, Global financial crisis, Growth, Inflation, Monetary policy, Nikkei, Shareholder, Zero lower bound
