Monetary Policy

There is a debate going on about the appropriateness of monetary easing in China. Monetary policy was excessively tight in 2014 but started loosening more meaningfully from late 2014, in an attempt to cushion slowing growth, facilitate rebalancing, support reform,...

In a normal review of the US, the IMF recently called on the Federal Reserve to drop its dot-plot tool and replace it with a single staff forecast, like the ECB.  We too have been critical of the individual macroeconomic...

In a recent address to the Economic Society of Australia, the Reserve Bank Governor Glenn Stevens hit the nail on the head when he remarked, “monetary policy alone can’t deliver everything we need and expecting too much from it can...

A week ago, the UK reported a largest than expected rise in average weekly earnings for the three months through April.  The 2.7% rise is the highest in four years. It followed a revised 2.3% increase in March, originally reported...

The Federal Reserve offers custodial services for foreign central banks.  Precisely which countries use these services is confidential as is who patronizes a commercial bank's services. There was a large draw down in the Treasuries the Fed holds for foreign...

The FOMC message is that it is still on course for hiking rates later this year.  The Fed previously told us it would taper, and it did.  It told us that there would be a "considerable period between the end of...

The US dollar has come back better bid after initially extending yesterday's pullback.  The euro pushed to $1.1330 after having dipped briefly below $1.1200 yesterday.   However, despite what appears to be an approaching brink with Greece, a softer than expected...

The most important driver of the dollar remains the de-synchronization of the monetary policy cycle.  The early and more aggressive action by the US, and the institutional flexibility, leaves the Federal Reserve in a position to begin normalizing monetary policy...

The substance of what ECB President Draghi contained few surprises.  The tone was cautiously optimistic that the worst is past for EMU.  The substance of what ECB President Draghi contained few surprises.  The tone was cautiously optimistic that the worst...

The US dollar is broadly higher as yesterday's gains are extended.  The driving force is not so much a shift in perceptions of the US economy, though the San Francisco Fed that claimed seasonal adjustment quirks are behind the repeated...

This Great Graphic comes from the Wall Street Journal.  It shows the evolution of market expectations for the first Fed rate hike from the monthly survey it conducts.  At the start of the year, many economists, like us, thought that...

One of the most important forces shaping the investment climate is that the US is closer to beginning to normalize monetary policy than other major countries and regions.  That gap may be measured in years, not months or quarters, and...

The Swiss National Bank announced today that as of May 1 the negative rate charged for sight deposits would be applicable to most institutions that were previously exempt. Many saw this as an easing move by the SNB and sold...

The US dollar fell against the major currencies and many emerging market currencies last week. Punished by disappointing data, it threatened to breakout of ranges that have confined it. However, the third consecutive upside surprise on core CPI helped the...

The key issue as the market heads into the weekend is whether the US dollar is breaking out of its trading range to the downside. Has the disappointing US economic data and the somewhat better European data finally taken its...