Comments on: What’s a central bank to do? http://www.creditwritedowns.com/2008/06/whats-central-bank-to-do.html Sat, 21 Nov 2009 08:48:41 -0700 http://wordpress.org/?v=2.8.6 hourly 1 By: Edward Harrison http://www.creditwritedowns.com/2008/06/whats-central-bank-to-do.html/comment-page-1#comment-33 Edward Harrison Tue, 03 Jun 2008 13:10:00 +0000 http://www.creditwritedowns.com/2008/06/whats-a-central-bank-to-do.html#comment-33 My first instinct as a central banker would be to hold rates firm like the ECB. Both the BoE and the ECB have inflation-only mandates. It may be a better and more politically independent way to run a central bank.<br/><br/>From where I sit, the Fed is and has been much more of an easy money bank for years. That's the reason the Swiss Franc, German Deutschemark and now the Euro have risen so much against the USD in the last 4 decades.<br/><br/>The US Dollar is not a hard currency. The Fed is dovish on inflation. What it needs to do is stand firm, even raise rates if necessary. They won't take this on board until its too late. My first instinct as a central banker would be to hold rates firm like the ECB. Both the BoE and the ECB have inflation-only mandates. It may be a better and more politically independent way to run a central bank.

From where I sit, the Fed is and has been much more of an easy money bank for years. That’s the reason the Swiss Franc, German Deutschemark and now the Euro have risen so much against the USD in the last 4 decades.

The US Dollar is not a hard currency. The Fed is dovish on inflation. What it needs to do is stand firm, even raise rates if necessary. They won’t take this on board until its too late.

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