Central Bank Watch
Norwegian Executive Monetary Policy Board Keeps a 2.25% Policy Rate
September 21, 2011
The last full review by policymakers in June projected a range of 2.25% – 3.25% in its key interest rate through the subsequent big review on October 19. The rate was at 2.25% at the time of that prediction, that is at the floor of the indicated range. Subsequent policy meetings on August 10 and […] More
Central Bank Watch
FOMC Statement Highlights and Some Reflections
September 21, 2011
The FOMC released its new monetary policy statement 10-15 minutes later than usual. Dissenting votes from three regional presidents — Plosser, Fisher and Kocherlakota — for the second meeting in a row suggest that the discussion was contentious. Fed officials downgraded their assessment of present economic conditions and, more importantly, escalated the downside growth risks […] More
Central Bank Watch
Icelandic Benchmark Interest Rate Not Raised Further
September 21, 2011
A shifting direction in Icelandic monetary policy had been signaled in a more hawkish statement from the Central Bank of Iceland in mid-June and acted upon with a 25-basis point increase on August 17 of the 7-day collateralized lending rate to 4.5%. Between March 2009 and February of the current year, fifteen cuts had reduced […] More
Central Bank Watch
FOMC Preview
September 21, 2011
The FOMC statement following a two-day meeting is expected to be released around 14:15 local time today (18:15 GMT). After last month’s meeting, Federal Reserve officials released a statement that downgraded the assessment of the U.S. economy, projected a slower pace of growth for coming quarters, attached greater downside risks to that new baseline forecast, […] More
New Overnight Developments Abroad - Daily Update
Judgement Day at the FOMC
September 21, 2011
The Federal Open Market Committee will release a scheduled policy statement at 18:15 GMT. Markets expect some sort of easing gesture but wonder about its effectiveness. U.S. existing home sales get released this morning as do Canadian consumer prices. Investors continue to believe that a Greek default is unavoidable and wonder if that event will […] More
Deeper Analysis
Many Things Are Depressing U.S. Job Creation, and Some Are Paradoxical
September 20, 2011
One reason for investor euphoria in the latter 1990s about long-term U.S. economic prospects was a pick-up in productivity growth, that is output per man-hour worked. Productivity tends to be a predictor of future changes in the standard of living, and so equity markets enjoyed an impressive rally in the years before 2000 when America’s […] More
Central Bank Watch
Wait and See Attitude at Hungary’s Central Bank
September 20, 2011
As analysts anticipated, policymakers at the Magyar Nemzeti Bank left their two-week deposit rate at 6.0%. Conflicting forces stalemated their thinking. The growth outlook has worsened substantially, prompting officials to halve their 2012 GDP growth forecast to 1.5% and to become more confident about lower inflation in the future. On the other hand, the Hungarian […] More
Central Bank Watch
Turkish Monetary Policy Left Unchanged with a Bias Toward Ease
September 20, 2011
The Central Bank of the Republic of Turkey retained a 5.75% one-week repo rate and kept overnight lending and borrowing rates at 9% and 5%, respectively. During the Great Recession, Turkey’s key rate was cut from 18.75% to 7.0% over the year between November 2008 and November 2009. Monetary policy subsequently had tightened in late […] More
New Overnight Developments Abroad - Daily Update
Italian Sovereign Debt Rating Downgraded by S&P
September 20, 2011
European equities rebounded after Monday’s drop despite more unsettling news from the region. S&P downgraded Italian long-term sovereign debt to a rating of A from A+. A reassessment by Moody’s is thought also to be likely. Press reports surfaced that the German industrial company Siemens withdrew half a trillion euros recently from one of the […] More
Larry's Blog
Euro Was Nearly Aborted Nineteen Years Ago Tomorrow
September 19, 2011
The Maastricht Treaty of December 1991 that laid out a process for a common European currency as early as 1997 and no later than 1999 required that all members of the European Community (EC) ratify the document within a year for it to be valid. The goal of European economic and monetary union (EMU) was […] More
