Monetary Policy

The much-awaited FOMC meeting is here. Discussions appear to revolve around to main questions.  What should the Fed do and what will they do?  The two are often confused.  Everyone has an opinion about the former.  It is like watching...

Seven years ago today, following frenzied weekend meetings, Lehman filed for bankruptcy. It confirmed the end of an era in a way that Bear Stearns demise had only hinted.   The world has not been the same since. Seven years ago...

The dovish signals from the ECB failed to offer lasting support for the global capital markets.  Asia shares slumped, with the Nikkei falling to new lows since February and taking out the psychologically important 17k level.  The MSCI Asia Pacific...

Conditioning has trained us to be skeptical when someone says this time is different.  It often means to justify some excess.  However, we still need to be sensitive to changing circumstances and relationships.  There are three ways that this monetary...

India’s Reserve Bank has been doing a commendable job of maintaining price stability and securing Indian markets from external shocks. But a proposal from the government to remove control of interest rates from the central bank has economists and policy...

When the men and women of the committee that sets UK interest rates get together these days, they are dealing with a deceptively simple question. Rates will go up, but how far and how fast? Their answer will decide the...

The Federal Reserve could be six weeks away from raising rates.  The FOMC statement from the end of last month appeared to have lowered the bar of a move.  It called the recent improvement in the labor market as "solid"...

The Federal Reserve provided limited forward guidance in today's statement.  It said that it "anticipates that it will be appropriate to raise the target range for the Fed funds rate when it has seen some further improvement in the labor...

While the markets wait for no man, the FOMC is a different story.  Janet Yellen expects to lead the Federal Reserve into taking the first step toward normalizing monetary policy in the coming months.  Although the statement she crafts is...

The Bank of Japan is engaged in the most aggressive asset purchases, and yet it has largely failed to lift inflation.  National consumer prices for June will report at the end of this week.  The headline rate expects to fall...

The light news stream has spurred some position squaring by short-term momentum traders.  This is giving the dollar a somewhat heavier tone, and weighing on European equity markets.  European bonds and Treasuries are little changed, though slightly firmer.  The light...

The latest Wall Street Journal survey found that 82% of economists expect a Fed hike in September, completely dismissing a July hike, as this Great Graphic illustrates.  A December hike is more likely to occur as noted by 15% of...

The ECB left policy unchanged.  The economic assessment was unchanged, in line with the staff forecasts made last month.  The asset purchases continue to go smoothly.  Inflation bottomed earlier this year, and it expects to remain low over the next...

The US dollar remains bid.  Yellen's comments and the Beige Book signal that the Federal Reserve is still on track to raise rates this year.  In contrast, as the Draghi will make clear today, the ECB is committed to completing...

Those regional Federal Reserve banks that want to hike the discount rate are gradually increasing.  Last month, the Richmond Fed joined four other regional Fed banks (Dallas, Kansas City, Philadelphia, and Cleveland).  Those regional Federal Reserve banks that want to...