The Federal Reserve halved the number of rate hikes it anticipates this year from four to two. The market has been moving toward this as well after having thought there would be no hikes this year. The dollar sold off. The dollar-bloc currencies and emerging market currencies are have rallied sharply. Risk assets in general like the idea of a less hawkish Federal Reserve.
Lobbying is often seen as a dirty business – a profession of backroom deals that promotes immoral special interests to the greedy. Therefore, you might be tempted to cheer a new anti-lobbying rule that is about to come into effect, banning public money from being used for lobbying in the UK. Scotland is also debating slightly more stringent lobbying rules of its own.
Yet not all lobbying is the same, and it is not always dodgy. By tarnishing all lobbying with the same brush, we could be in for badly informed public policy.
There’s an old adage in economics that the best way to cure deflation is to drop money from helicopters. Clearly, this phrase isn’t older than mid-20th century, because before that time we didn’t have helicopters… we also didn’t have manipulative central banks. Now we have both, and they are about to join forces.
The helicopter statement isn’t meant literally. It conveys how central banks approach an economy when mainstream – and even out of the mainstream – monetary policies have failed.
The Organization for Economic Cooperation and Development (OECD) is preparing to meet in Paris on Wednesday, and anti-corruption groups have taken the opportunity to raise their concerns.
Since the Federal Reserve hiked rates in December, both the European Central Bank and the Bank of Japan have eased policy further. The idea that because they cut rates means that the Fed cannot raise rates is a not a particularly helpful way to think about that is happening.
On 11 February, the South Korean government abruptly shut down the Kaesong Industrial Complex (KIC), a joint inter-Korean industrial zone located just 10 kilometres north of the Demilitarised Zone (DMZ), as a punishment for North Korea’s recent nuclear test and rocket launch. The closure left more than 52,000 North Korean workers unemployed and more than 120 small- and medium-sized South Korean companies with nowhere to do business.
The market’s focus has shifted to the two-day FOMC meeting that begins today. The Federal Reserve should be pleased with recent developments. Labor market slack continues to be absorbed. Core inflation measures continue to edge higher.
The US dollar is steady to firmer against most of the major and emerging market currencies. Equity markets are heavier, and oil continues to surrender some of its recent gains. Profit taking is weighing on Eurozone bonds and JGBs while US Treasuries and UK gilts are firmer.
Since the end of the 2000s, a new era for regional cooperation has been unfolding in Asia. China’s ascent as a regional leader, the advent of mega FTAs and the changing presence of India have driven this change. However, what does this new environment mean for Japan, and how will it shape the future of the region?
The US dollar is firmer but largely confined to the ranges seen before the weekend against most of the major currencies. The yen is also firmer as dollar sellers reemerged near JPY114.00. The dollar is gaining against most emerging market currencies, though Asian currencies, notably the Korean Won, are firmer.
