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Analysis and Comment (25)

Janet Yellen will make waves next year. Janet Yellen will make waves next year. International Monetary Fund

What will happen when the US Fed starts hiking rates?

As the US economy emerges from recession, the prospect of the US Federal Reserve raising interest rates grabs the attention of the financial markets more and more. US rates have been close to zero for…
All eyes are on the US Federal Reserve to see when it will lift interest rates. All eyes are on the US Federal Reserve to see when it will lift interest rates. www.shutterstock.com

‘Houston… when will we have liftoff?’ Interpreting the US Federal Reserve’s guidance

Six years after the dramatic collapse of Lehman Brothers, the United States economy is finally showing signs of a stronger recovery from the global financial crisis. The Federal Reserve (Fed) is winding…
Double speak? It isn’t easy being a reserve banker. Double speak? It isn’t easy being a reserve banker. Dan Peled/AAP

Greenspan’s ‘uncertainty principle’ and the evolution of Fedspeak

Last Tuesday the minutes of August’s Reserve Bank of Australia board meeting were released. Market participants speculated about what they would say, currency and bond markets responded to what they did…
In the eye of the beholders, dollar dominance rules. In the eye of the beholders, dollar dominance rules. peasap

Why dollar dominance is secure despite growth of global rivals

In imploring the world to be less dependent on the US dollar for international transactions, French finance minister Michel Sapin is expressing a wish that many of the euro’s creators hoped would already…
Making things black and white at The Bank of England. Making things black and white at The Bank of England. Mark Cornelius/Bank of England

ECB drama highlights the central bank transparency dilemma

When the European Central Bank sent markets reeling yesterday with moves designed to stimulate growth, the 24 people who made that decision could remain comfortable that their exact arguments and misgivings…
The Bank of England’s latest communication strategy has been dubbed “fuzzy guidance” - but how much should central banks reveal? The Bank of England’s latest communication strategy has been dubbed “fuzzy guidance” - but how much should central banks reveal? Image sourced from www.shutterstock.com

Forward or fuzzy: just how much should central banks reveal?

The effective death of the forward guidance strategy offered by the Bank of England came with the announcement in early February that there would be a switch to a less quantitative approach. Dubbed by…
Incoming US Federal Reserve chair Janet Yellen must choose whether to further taper the quantitative easing program. Incoming US Federal Reserve chair Janet Yellen must choose whether to further taper the quantitative easing program. EPA/Jim Lo Scalzo

Markets watch as Bernanke hands over to Yellen

Ben Bernanke prepares to vacate his seat as Chairman of the US Federal Reserve on Friday, making way for for Janet Yellen, just as the developed economies finally seem to be coming right. Yellen’s impact…
Outgoing US Federal Reserve chairman Ben Bernanke is cautiously pulling back the Fed’s quantitative easing program. Outgoing US Federal Reserve chairman Ben Bernanke is cautiously pulling back the Fed’s quantitative easing program. AAP

Explainer: What US Fed tapering means for markets

The US Federal Reserve has announced that after more than five years of support, the “tapering” of its quantitative easing program is to begin. So what will the consequences of the gradual withdrawal of…
China has far more to lose from too few US dollars than it does from a dollar surplus. China has far more to lose from too few US dollars than it does from a dollar surplus. Urbanartcore.eu/Flickr

US economic policy: the right settings, disastrous process

The US debt crisis is over for now, but legislators have just kicked the can down the road. In this series on the US debt ceiling, academics from Australia, the UK and the US assess the lingering global…
Janet Yellen supports programs to create job growth, a move which means keeping the Fed’s easy money policy in place. Janet Yellen supports programs to create job growth, a move which means keeping the Fed’s easy money policy in place. EPA/Franck Robichon

Yellen to keep status quo as US Fed struggles with slow recovery

If endorsed by the US Senate, Janet Yellen is set to become the first woman to head the US Federal Reserve, the most powerful central bank in the world. She’ll replace the current chairman Ben Bernanke…
Anyone need a cash injection? Anyone need a cash injection? Nick Ares

The regressive politics of quantitative easing

When financial markets stood on the verge of collapse in the summer of 2008, two of the world’s most important central banks, the US Federal Reserve and the Bank of England, began considering unorthodox…
Brazil could be at risk if the QE money dries up. Brazil could be at risk if the QE money dries up. Owen Humphreys/PA

Not all emerging markets are in the same QE boat

The US Federal Reserve’s surprise decision to continue quantitative easing (QE) was generally well received in those countries with rapidly growing and industrialising economies. They were worried that…
Janet Yellen: leader or follower? Janet Yellen: leader or follower? IMF

It doesn’t really matter who chairs the Federal Reserve

The surprising news that Larry Summers has withdrawn his bid to become the next chair of the US Federal Reserve has opened up the big question of who should lead America’s central bank. The new front runner…
Indian Finance Minister P. Chidambaram is facing high inflation, an annual trade deficit of US$200 billion and a falling rupee. Indian Finance Minister P. Chidambaram is facing high inflation, an annual trade deficit of US$200 billion and a falling rupee. AAP

India’s inflation woes could see rupee fall even further

The Indian economy is in trouble. The anticipated tapering of the US Federal Reserve’s aggressively expansionary quantitative easing program has seen a drying up of capital inflow into a country with a…
A US inquiry is questioning Lynn Tilton and her firm Patriarch Partners over its relationship with an ex-Army official, Norbert E Vergez. A US inquiry is questioning Lynn Tilton and her firm Patriarch Partners over its relationship with an ex-Army official, Norbert E Vergez. Wikimedia Commons

Private equity’s very public connections

US reports have recently circulated of a government probe into the hiring of former Colonel Norbert Vergez by the private equity firm Patriarch Partners, headed by billionaire “turnaround queen” and would-be…
Fabrice Tourre, a former trader for Goldman Sachs, walks out of the United States Federal Court after being found liable for defrauding investors. Fabrice Tourre, a former trader for Goldman Sachs, walks out of the United States Federal Court after being found liable for defrauding investors. AAP

Walking the line on GFC times

Echoes of the Global Financial Crisis resonate while debate continues on the best way of dealing with its consequences, including the actions taken by the Europeans and Americans to counter its effects…
Global markets have experienced sharp sell-down off fears of a wind-down in US quantitative easing. Global markets have experienced sharp sell-down off fears of a wind-down in US quantitative easing. AAP

Reasons why we should expect a lower Australian dollar

The response to US Federal Reserve Ben Bernanke’s comments about the possibility of ending its policy of quantitatitive easing has helped evoke a global sell-off as markets question his upbeat assessment…
The US Federal Reserve has made explicit the economic targets it wants to reach through its monetary policy. The US Federal Reserve has made explicit the economic targets it wants to reach through its monetary policy. AAP

US Fed stimulus names its targets in new policy direction

The announcement by the US Federal Reserve Bank that it would link its monetary policy to the achievement of specific economic targets beyond inflation is a new development in its approach to policy. In…
The US Federal Reserve has extended its bond-buying program, but will it be effective in boosting the economy? The US Federal Reserve has extended its bond-buying program, but will it be effective in boosting the economy? Image from www.shutterstock.com

More money, more problems? The quantitative easing quandary

In an attempt to bolster the economy, the Federal Reserve announced a fresh round of bond purchases to replace Operation Twist, the stimulus program that is set to expire this month. It will spend $US45…
Publishing long-term interest rate projections can allow the Reserve Bank to operate with greater transparency. Publishing long-term interest rate projections can allow the Reserve Bank to operate with greater transparency. AAP

A route to greater transparency and independence for the RBA

Today, all eyes will be on the Reserve Bank amid speculation that the cash rate will be eased by at least 25 basis points. The RBA has often faced pressure from politicians and business leaders to reduce…
Greg Smith’s expose on Goldman Sachs could reframe the debate on regulatory reform - but is business media on board? Greg Smith’s expose on Goldman Sachs could reframe the debate on regulatory reform - but is business media on board? AAP

A toxic relationship: business media, Goldman Sachs reveal bottom line on business morality

The worst damage to the Goldman Sachs franchise from the extraordinary attack on its corporate culture by a mid-level former employee comes from its clinical execution. With exquisite timing, Greg Smith’s…
Bank of England Governor Mervyn King has warned UK banks to prepare for the worst. Bank of England Governor Mervyn King has warned UK banks to prepare for the worst.

Britain prepares for worst, but liquidity will be key to stabilising Europe

Bank of England Governor Mervyn King has called on British banks to lift their capital reserves, hold off on paying dividends and cut bonuses amid growing fears about Europe’s economic stability. King’s…
US House Speaker John Boehner wants government programs cut: but is austerity politics the answer? US House Speaker John Boehner wants government programs cut: but is austerity politics the answer? AAP

US austerity politics playing on default fears mask a looming problem

For some time, it appeared that the severity of the global financial crisis had created a compelling “learning moment” that promised to return the world to a more civilised form of capitalism. Insufficient…
There is economic reasoning behind Glenn Stevens’s low public profile. There is economic reasoning behind Glenn Stevens’s low public profile. AAP

Is Ben Bernanke giving Glenn Stevens a run for his money?

Late last month, Ben Bernanke held the first ever press conference by a chairman of the US Federal Reserve Bank. For more than an hour, he took questions about the Federal Open Market Committee’s decision…