Post Tagged with: "monetary policy"
The Curious Case of Benjamin Bernanke and QE3
Market action is quiet ahead of today’s Jackson Hole speech; US Q2 GDP likely to confirm slowdown. We do not expect an announcement of next round of asset purchases; yet doubt Fed will limit tools. EM asset prices are likely to continue trading as high beta irrespective of Bernanke’s speech
Roubini: No QE3 announcement at Jackson Hole but QE3 will happen
Nouriel Roubini spoke to CNBC today about the Speech that Federal Reserve Chairman Ben Bernanke will deliver tomorrow. Roubini does not expect Bernanke to announce QE3 in this speech. However, he does expect QE3 at some point in the future because the economy is so weak
After Ben, Markets Brace for US Payrolls
The impact of Fed Chairman Bernanke’s testimony – his assessment of the economy and the further accommodation that can be provided to stem economic stresses into next week – will dominate market action into the next week. The G10 currency complex has been highly sensitive to the global risk environment. The potential to break outside recent ranges is down to the policy responses to the crisis together with the continued evolution of the growth figures with elevated volatility levels indicating the markets are preparing for further disruption ahead
Buy the Rumor, Sell the Fact Ahead of Jackson Hole
Global stocks continue to push higher ahead of speech tomorrow; dollar remains soft. Fed unlikely to deliver QE3 tomorrow and therefore markets may be disappointed. Is a potential change in PBOC policy in the pipeline; Hawkish comments from Polish central bank
The Jackson Hole Spaghetti Toss
If the Chairman has to do something, then the real question is what policy response is adequate to a) reviving asset prices and b) returning the US to trend real GDP growth (since the portfolio balance channel appears to be the only one left for monetary policy transmission to work). Many institutional investors may be realizing that is a null set given current political configurations, and so whatever the Chairman delivers – even if he goes boldly where no Fed governor has ever gone before – may have a very short half life, as we saw with the last move of pegging the 2 year US Treasury yield at the fed funds rate
Now For Something Completely Different: WPA
This column argues that while Bernanke will want to show that the Fed still has options at its disposal, with various trade-offs associated, perhaps he may want to also underscore the limitations of monetary policy. If current conditions are somewhat like the Great Depression, then we may need to face up to the fact that it ultimately was not monetary policy that ended the crisis but fiscal policy
Sentiment Improves as Markets Anticipate Policy Response
Market sentiment improves ahead of this week’s Jackson Hole speech; Stocks and oil higher. Market focus this week on Jackson Hole; Policy announcement likely to disappointment. Singapore and South African CPI and central bank meetings in Turkey and Hungary in focus
Brazil has more monetary policy space in the event of global crisis
Frederick Searby says that Brazil has the opposite problem of the developed economies in that it is dealing with overheating and inflation while the developed economies have a serious deflationary undertow. His view is that if there is a crisis like in 2008, Brazil can cut rates and probably will start doing so. That gives it more policy space than we see in the US where rates are zero percent
US real 10 year yields at record 225bpt discount to JGBs
PIMCO, the world’ largest bond fund call this suppression of yields financial repression because it means savers and bond investors get negative real returns. However, John Hempton pointed out that in Japan, where this monetary policy is well-advanced, deflation has set in and real yields are positive despite the zero-rate interest policy (ZIRP)
Paul Krugman Still Gets MMT Wrong
I appreciate the role that Krugman plays. Like many of you, I enjoy reading his blogs and more often than not, I agree with him. He is almost the lone, sane, voice in a position of authority who argues against the standard deficit hyperventilation that is driving the nation into a great depression. I mean no disrespect in the following critique. And I am glad that he is writing about MMT—most of those within the Beltway simply ignore it. But there are two reasons to respond to his critique: first, there is some hope that he might change his mind and embrace MMT. That would allow him to mount a much more powerful attack on the deficit hysterians. Second, he is misleading his many readers—by misstating what MMT believes, and by his own misunderstanding of monetary operations
Why Permanent Zero is toxic and leads to depression
While rate easing and its cousin permanent zero might have some salutary effect in the short term, these policies are toxic to the financial sector and consumption demand. Likely, they will not spur the economy but lead to a deepening malaise
For whatever reason
Investors shunning US debt ‘for whatever reason’ presupposes the outcome. I need to see the steps that get us from 2.25% 10-year rates to 4 or 5% without the Fed actively raising rates because the only way rates are going higher is because the Fed is forced by inflation to raise them