Posted by hkarner - 25. September 2015
Source: The Economist
It will take more than patience to free rich economies from the zero-interest-rate world
SOMETIMES doing nothing really is better than doing something. On September 17th the Federal Reserve made the right decision to leave its benchmark interest rate, unchanged since 2008, near zero. With inflation sitting well below the Fed’s 2% target and doubts about China’s economy prevalent (see article), a rise would have been an unnecessary risk.
Yet Janet Yellen, chair of the Fed, will face a similarly tough choice in October—and possibly for many months thereafter. And whenever “lift-off” occurs, financial markets expect rates to stay historically low for years to come. The era of unconventional monetary conditions shows no sign of ending. If the rich world’s central banks are to get back to the normality they crave, their standard toolkit may not suffice. It is time to think more boldly, especially about the idea of inflation targeting.
That is because the usual relationship between inflation and unemployment appears to have broken down. In the short run, economists think these two variables ought to move in opposite directions. High joblessness should weigh on prices; low unemployment ought to push inflation up, by raising wages. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: china, Economist, Fed, Inflation, Interest, Yellen | Leave a Comment »
Posted by hkarner - 25. September 2015
Deutsche Wirtschafts Nachrichten | Veröffentlicht: 25.09.15 02:44 Uhr
Die Chefin der Fed, Janet Yellen, will die Zinsen auf jeden Fall noch 2015 erhöhen. EZB-Banker dagegen räumen ein, dass niemand wisse, was nach einer Abkehr von den Niedrigzinsen geschieht – und kündigen an, in der Euro-Zone bei der Politik des billigen Geldes bleiben zu müssen.
Die US-Notenbank (Fed) wird nach Worten von Fed-Chefin Janet Yellen noch in diesem Jahr mit ihren Zinserhöhungen beginnen. Davon gehe sie wie die meisten ihrer Kollegen im für die Zinspolitik zuständigen Fed-Gremium (FOMC) weiterhin aus, sagte Yellen am Donnerstag in einer Rede an der Universität von Massachusetts in Amherst. Voraussetzung sei allerdings, dass die Inflation stabil bleibe und die heimische Wirtschaft stark genug sei, um die Beschäftigung anzukurbeln. Die allgemeinen konjunkturellen Aussichten nannte sie „solide“. Die jüngsten Entwicklungen der Weltwirtschaft und an den Finanzmärkten würden die Politik der Fed wohl nicht maßgeblich bestimmen, ergänzte Yellen.
Aufgrund der langen Phase extrem niedriger Zinsen drohen Zentralbanken weltweit nach Einschätzung von EZB-Chefvolkswirt Peter Praet Probleme bei einer Normalisierung der Sätze. Wenn die Zinsschraube schließlich wieder angezogen werde, dürfte sich dies schwieriger gestalten als zuvor, sagte Praet am Donnerstag vor Teilnehmern einer Konferenz. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: DWN, ECB, Fed, Inflation, USA, Yellen | Leave a Comment »
Posted by hkarner - 23. September 2015
LONDON – The US Federal Reserve’s decision to delay an increase in interest rates should have come as no surprise to anyone who has been paying attention to Fed Chair Janet Yellen’s comments. The Fed’s decision merely confirmed that it is not indifferent to international financial stress, and that its risk-management approach remains strongly biased in favor of “lower for longer.” So why did the markets and media behave as if the Fed’s action (or, more precisely, inaction) was unexpected?
What really shocked the markets was not the Fed’s decision to maintain zero interest rates for a few more months, but the statement that accompanied it. The Fed revealed that it was entirely unconcerned about the risks of higher inflation and was eager to push unemployment below what most economists regard as its “natural” rate of around 5%. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Central Banks, Fed, Friedman, Inflation, Kaletsky, Monetarists, Project Syndicate, Unemployment, USA, Yellen | Leave a Comment »
Posted by hkarner - 17. September 2015
Nathan Sussman, Osnat Zohar 16 September 2015, voxeu
The 2014 decline in oil prices lowered short-run inflation. Before the Global Crisis, the medium-term correlation between oil prices and inflation was weak, but it has become much stronger since the onset of the Crisis. This column suggests that following the onset of the Crisis, inflation expectations reacted quite strongly to global demand conditions and oil supply shocks. The public’s belief in the ability of monetary authorities to stabilise inflation at the medium-term horizon has deteriorated.
The sharp decline in oil prices starting in late 2014 sparked a debate about their effect on inflation and the world economy (e.g. World Bank 2015). The decline in oil prices lowered inflation in the short run, and in some cases pushed some economies that were already experiencing very low inflation into deflation. More surprisingly, data from the US, the Eurozone, the UK, and Israel show that oil prices have a strong correlation with inflation expectations for the medium term, as measured by five-year breakeven inflation rates.1 Before the Global Crisis, this correlation was weaker and expectations were firmly anchored at the 2% level. However, from the onset of the Global Crisis, the correlation has been quite high (Table 1 and Figure 1).
Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Inflation, oil price, Sussmann, voxeu, Zohar | Leave a Comment »
Posted by hkarner - 4. September 2015
Carmen Reinhart is Professor of the International Financial System at Harvard University’s Kennedy School of Government.
SEP 3, 2015, Project Syndicate
CAMBRIDGE – Inflation – its causes and its connection to monetary policy and financial crises – was the theme of this year’s international conference of central bankers and academics in Jackson Hole, Wyoming. But, while policymakers’ desire to be prepared for potential future risks to price stability is understandable, they did not place these concerns in the context of recent inflation developments at the global level – or within historical perspective.
For the 189 countries for which data are available, median inflation for 2015 is running just below 2%, slightly lower than in 2014 and, in most cases, below the International Monetary Fund’s projections in its April World Economic Outlook. As the figure below shows, inflation in nearly half of all countries (advanced and emerging, large and small) is now at or below 2% (which is how most central bankers define price stability).
Most of the other half are not doing badly, either. In the period following the oil shocks of the 1970s until the early 1980s, almost two-thirds of the countries recorded inflation rates above 10%. According to the latest data, which runs through July or August for most countries, there are “only” 14 cases of high inflation (the red line in the figure). Venezuela (which has not published official inflation statistics this year) and Argentina (which has not released reliable inflation data for several years) figure prominently in this group. Iran, Russia, Syria, Ukraine, and a handful of African countries comprise the rest.
The share of countries recording outright deflation in consumer prices (the green line) is higher in 2015 than that of countries experiencing double-digit inflation (7% of the total). Whatever nasty surprises may lurk in the future, the global inflation environment is the tamest since the early 1960s.
Indeed, the risk for the world economy is actually tilted toward deflation for the 23 advanced economies in the sample, even eight years after the onset of the global financial crisis. For this group, the median inflation rate is 0.2% – the lowest since 1933. The only advanced economy with an inflation rate above 2% is Iceland (where the latest 12-month reading is 2.2%). Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Deflation, Fed, Inflation, Project Syndicate, Reinhart | Leave a Comment »
Posted by hkarner - 23. August 2015
Carin van der Cruijsen, David-Jan Jansen, Jakob de Haan 23 August 2015, voxeu
Central banks have typically targeted their communication at financial markets. Increasingly, however, many have started actively communicating with the general public. Using Dutch survey data, this column finds that the public’s knowledge of monetary policy objectives is far from perfect, and varies widely across respondents. Those with a greater understanding of ECB objectives tend to form more realistic inflation expectations. Central banks seeking to target the general public must take account of discrepancies in households’ knowledge of and interest in monetary policy.
Central banks are increasingly using communication as an integral element of monetary policy. While initially financial markets were the main audience, in recent years there has been increasing attention paid to communicating with the general public. The reason is that the effects of monetary policy largely operate through expectations, and that the set of relevant actors also includes the household sector. For instance, expectations about the economic outlook can be an important determinant of the consumption and investment decisions that households make on a daily basis (Blinder et al 2008).
Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Central Banks, Cruijsen, de Haan, ECB, Inflation, Jansen, Monetary System, voxeu | Leave a Comment »
Posted by hkarner - 16. August 2015
Stefano Neri, Stefano Siviero 15 August 2015, voxeu
EZ inflation has been falling steadily since early 2013, turning negative in late 2014. This column surveys a host of recent research from Banca d’Italia that examined the drivers of this fall, its macroeconomic effects, and ECB responses. Aggregate demand and oil prices played key roles in the drop, which has consistently ‘surprised’ market-based expectations. Towards the end of 2014 the risk of the ECB de-anchoring inflation expectations from the definition of price stability became material.
Low inflation: An EZ-wide issue
Eurozone inflation fell steadily in 2013 and 2014, reaching negative territory at the end of 2014 – year-on-year inflation was ‐0.2% in December and core inflation hit the historical low at 0.7% in the same month (Figure 1). Inflation fell to historically low levels not only in the countries that had been severely affected by the sovereign debt crisis, but also in those less directly influenced (Figure 2). In December 2014, no country of the Eurozone registered an inflation rate above 1%; in 12 countries out of 18 (Lithuania joined 1 January 2015) consumer price dynamics were negative. Formal econometric analysis confirms that these developments reflected mostly common rather than country-specific shocks (Delle Monache et al 2015). Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: ECB, Euro, Inflation, Neri, Siviero | Leave a Comment »
Posted by hkarner - 11. August 2015
By Nathan Tankus, a writer from New York City. Follow him on Twitter at @NathanTankus
It is commonly argued that inflation erodes debts. However, the usual defenses amount to little more then circular logic. Take this for example from Paul Krugman
In major economies, very few debtors have received a break. And far from being inflated away, the burden of debt has been aggravated by falling inflation, which is running well below target in America and near zero in Europe.
The source of the confusion here is that it is popular do divide key economic variables by abstract measures of the prices across the economy (such as the Consumer Price Index). This makes sense sometimes but in other situations become nonsensical. Debt is one such example. In the United States most people have debts denominated in U.S. Dollars. A useful proxy for the burden of debt is the ratio between an individual’s or sector’s nominal debt to its nominal income. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: Debt, Inflation, Krugman, Naked Capitalism, Tankus | Leave a Comment »
Posted by hkarner - 14. Juni 2015
Langfristig sind die derzeitigen Niedrigzinsen für alle ein Gewinn, sagt EZB-Chefökonom Peter Praet, auch für Sparer
STANDARD: Die EZB mischt sich seit Krisenausbruch intensiv in politische Debatten ein, schreibt Ländern vor, was sie tun sollen. Überschreiten Sie nicht Ihr Mandat?
Praet: Die EZB trifft geldpolitische Entscheidungen, um ihr Ziel, die Gewährleistung von Preisstabilität, zu erreichen. Wir äußern uns hörbar zu Strukturreformen, wenn dies im Rahmen unseres vertraglich festgeschriebenen Mandats für notwendig gehalten wird. In dieser Hinsicht unterscheiden wir uns beispielsweise von der Federal Reserve in den USA, die sich nie an solchen Debatten beteiligen würde.
STANDARD: Das ist für viele ein Problem.
Praet: Oft wird uns geraten, uns allein auf Geldpolitik zu konzentrieren. Aber in einer Währungsunion haben die Länder die Flexibilität verloren, die ein eigener Wechselkurs bietet. Solide Governance und effektive Institutionen sind also von zentraler Bedeutung. Das gilt für die Arbeits- und Gütermärkte, die Justiz und für die Verwaltungsbehörden. Das ist notwendig für eine wirksamere Geldpolitik in einer Währungsunion, und deshalb sagen wir den Regierungen, dass strukturelle Reformen wichtig sind. Dabei ist es für uns nicht von Interesse, wie Länder die Reformen durchführen. Das ist ihnen überlassen. Uns interessiert, ob sie erfolgreich sind. Allerdings möchte ich selbstkritisch anmerken, dass unsere Botschaften in der Vergangenheit zu sehr wie ein Mantra klangen. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: ECB, Euro, Inflation, Praet, Standard | Leave a Comment »
Posted by hkarner - 11. Juni 2015
Source: Project Syndicate
Daniel Gros is Director of the Brussels-based Center for European Policy Studies. He has worked for the International Monetary Fund, and served as an economic adviser to the European Commission, the European Parliament, and the French prime minister and finance minister. He is the editor of Economie Internationale and International Finance.
BRUSSELS – It has now been nearly half a year since the European Central Bank declared its intention to buy some €1.1 trillion ($1.3 trillion) worth of eurozone bonds. When it first announced the so-called “extended asset-purchase program” in January, the ECB emphasized that it was only expanding an existing program, under which it had been buying modest quantities of private-sector bonds, to cover government paper. But this pretense of continuity was just that: a pretense.
In reality, by purchasing large volumes of government bonds, the ECB was crossing the Rubicon; after all, it is explicitly prohibited from financing governments. The ECB’s defense was that that the program was the only way to move inflation closer to its target of approximately 2%. Moreover, it pointed out, it was merely following the example of other major central banks, including the Bank of England, the Bank of Japan, and especially the US Federal Reserve, whose program of quantitative easing (QE) entailed the purchase of more than $2 trillion worth of long-term securities from 2008 to 2012. Den Rest des Beitrags lesen »
Posted in Artikel | Getaggt mit: ECB, Euro, Gros, Inflation, Project Syndicate, QE | Leave a Comment »