Institutional Investor (January 6, 2014)
Monetary expansion continues to be the central-bank fashion in much of the developed world. In contrast, the Central Bank of Russia (CBR), “has surprised the market with a hard-line monetary stance.” Instead of stoking short-term economic growth, CBR Governor Elvira Nabiullna is firmly committed to moderating inflation, and “most analysts credit her tight-money policy as the best option under the circumstances.”Monetary expansion continues to be the central-bank fashion in much of the developed world. In contrast, the Central Bank of Russia (CBR), “has surprised the market with a hard-line monetary stance.” Instead of stoking short-term economic growth, CBR Governor Elvira Nabiullna is firmly committed to moderating inflation, and “most analysts credit her tight-money policy as the best option under the circumstances.”
Tags: Analysts, Central Bank of Russia, Economic growth, Elvira Nabiullna, Inflation, Monetary expansion, Monetary policy, Russia, Tight-money policy
Euromoney (November Issue)
“Janet Yellen is eminently well qualified to lead the Federal Reserve. But investors should not assume that continuation of policy as normal comes without risk. Her dovish stance on inflation is worth noting and hedging against.”
Tags: Dovish, Federal Reserve, Hedging, Inflation, Investors, Janet Yellen, Policy, Qualified, Risk
Financial Times (November 11, 2013)
“Japan’s inflationary momentum remains worryingly sluggish. The recent acceleration in prices is the result of surging energy costs, not of domestically generated inflation. Regular wages–excluding overtime and bonuses–fell for a 16th consecutive month in September…. The government must be ready to take more of an activist line to secure its objective.… The government should also be much bolder in its structural reform agenda, aimed at stimulating the rate of long-term growth.”
Tags: Bonuses, Energy costs, Government, Growth, Inflation, Japan, Momentum, Overtime, Sluggish, Structural reform, Wages
Financial Times (April 18, 2013)
“The revival of Japan will be beneficial to the rest of the world, since it is also a process of evolution into a mature economy that can build win-win relationships with its economic partners,” writes Finance Minister Taro Aso. He continues, “the Bank of Japan has fired a monetary bazooka at deflation,” aiming to achieve 2% inflation. A “second bazooka” will seek to create private demand with flexible fiscal policy and the aim of boosting real GDP by 2%. Already, there is a dramatic improvement of economic and market sentiment. This “momentum must now be turned into a recovery.”
Tags: BOJ, Deflation, Economy, Finance Minister, Inflation, Japan, Market sentiment, Recovery, Taro Aso
Financial Times (March 29)
“The challenge facing Japan’s new leadership in escaping from economic stagnation and deflation was underscored on Friday as data showed further declines in consumer prices and an unexpected contraction in factory output. Haruhiko Kuroda, the new governor of the Bank of Japan, could struggle to reach his goal of generating 2 per cent inflation in two years, analysts said, after the government data indicated core consumer prices fell 0.3 per cent in February compared with a year earlier.”
Tags: BOJ, Consumer prices, Deflation, Economy, Factory output, Inflation, Japan
The Economist (February 23)
“With short-term interest rates still stuck near zero and their balance-sheets stuffed with government bonds, the central banks of America, Britain and Japan are experimenting with a shift in approach: coupling monetary action with commitments designed to alter the public’s expectations of interest rates, inflation and the economy…. A more doveish stance would entail tolerating higher inflation, at least temporarily, in pursuit of higher output.” But there is “a question-mark over what this wave of central-bank experimentation can achieve: since bond yields are already so low, the marginal return to coaxing them even lower may be scant. For now, though, buoyant stockmarkets are giving the activists the thumbs-up.”
Tags: Bonds, Central banks, Inflation, Interest rates, Japan, Output, Stockmarkets, U.S., UK, Yields
Chicago Tribune (December 14)
“The Fed helped the nation through a crisis. Now it could be creating risk.” The Fed has indicated it will maintain near-zero interest rates until the unemployment falls below 6.5% or inflation rises above 2.5%. This monetary policy was championed by Chicago Fed President Charles Evans, an inflation dove and policy activist, but the policy is misguided. “At this stage of the recovery, the biggest drags on the employment market have little to do with credit availability and interest rates — factors where the Fed does have influence — and much to do with the failures of elected politicians to fix spending and tax policies…. The central bank just isn’t all-powerful…. The Fed risks becoming a source of the problems it has done so much in recent years to help resolve.”
Tags: Evans, Inflation, Monetary policy, Risk, Spending, Tax, Unemployment
Euromoney (December Issue)
We might be in line for some tasty economic porridge in 2013. “The US, Japan and Europe will be too cold next year. Manufacturing from emerging economies might be too hot. The result, though, might be just right.” World GDP could expand at 3% with industrial output up 5% or more. “Like Goldilocks’ porridge—growth is warm enough to reduce defaults and produce cashflow to service debt, but not too hot to spark inflation and a massive bond sell-off.”
We might be in line for some tasty economic porridge in 2013. “The US, Japan and Europe will be too cold next year. Manufacturing from emerging economies might be too hot. The result, though, might be just right.” World GDP could expand at 3% with industrial output up 5% or more. “Like Goldilocks’ porridge—growth is warm enough to reduce defaults and produce cashflow to service debt, but not too hot to spark inflation and a massive bond sell-off.”
Tags: 2013, Economic forecast, Emerging economies, Europe, GDP, Industrial ouput, Inflation, Japan, Manufacturing, U.S.
Institutional Investor (September 5)
GDP targeting may be “the real message from Jackson Hole.” At this annual meeting of central bankers a paper presented by Michael Woodford advocated GDP targeting. “The Fed has already promised to keep rates low through 2014, but if it were to switch gears, it would instead promise to keep rates low indefinitely, until nominal GDP, or GDP adjusted for inflation, was showing clear signs of a recovery.”
Tags: Central bankers, Fed, GDP targeting, Inflation, Interest rates, Jackson Hole, Michael Woodford
New York Times (November 16)
In Europe, “there is very little time left to avoid financial catastrophe.” Much of Europe’s fate now lies in the hands of Germany’s Chancellor Angela Merkel. Unfortunately, she has been following, rather than leading. “She needs to challenge her voters’ simplistic stereotypes of southern European sloth and tell them the truth: The real threat to Germany isn’t inflation; it is an economic collapse across Europe.”
