Tag : Central Bank

Japan – Monetary policy: let’s give it another try

Central bank credibility is a necessary condition for monetary policy to be successful in achieving its objectives. It refers to the authority (independence) of the central bank to act when circumstances require and to its willingness and ability to take the appropriate measures.

 

New monetary season

For the financial markets, summer’s end is often the occasion for deep-felt upheavals. This summer, investors left on vacation filled with trepidation about the economic impact of Brexit, about robust job creations in the US and how they might change monetary policy prospects, and about the outcome of European banks’ stress tests.

 

Higher oil prices: good news or bad?

On 20 January, Brent crude oil was trading at USD27.88 a barrel (EUR25.52), the lowest price this year. Prices recently rebounded to USD50 (EUR44.70). Without trying to forecast future oil pricing trends – which, as shown by the experience of 2015, are even more difficult to predict than other economic variables – it is worthwhile to consider the consequences of higher prices

 

Monetary boomerang

In most countries, central bank independence from government is taken for granted. Yet, the autonomy, i.e. the ability to do whatever a central bank considers necessary within its mandate, is sometimes surprisingly limited, albeit for other reasons.

 

Currency markets weigh on central bank autonomy

This chart shows the evolution of the euro, the yen and the US dollar since the start of the year as well as the evolution of 10 year government bond yields in Germany, Japan and the US.

 

US slowdown disbelief

In the US the slowdown in the manufacturing sector is clearly illustrated by the decline in the ISM manufacturing index

 

The first rate hike: source of relief or cause for concern?

The meeting of the Federal Open Market Committee today and tomorrow has created significantly more nervousness than is normally the case. Many consider that the time is ripe for a first hike of the Federal funds rate in this business cycle, whereas others argue that it would be better to wait a little bit longer. Views differ and that is what makes a market.

 

Who’s to blame for low interest rates?

Bond yields are very low and though ECB QE provides part of the explanation, the underlying causes are slow growth and low inflation

 

Full throttle, limited oomph: why global growth remains slow

Recently there was a weekend gathering of sports cars near my home. I will not go into the question whether it’s rational to drive a car which reaches the legal speed limit in second gear (what do you do with the five or six other gears?), but as an economist, it made me think. Are […]

 
 
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