Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘QE’

Understanding Today’s Stagnation

Posted by hkarner - 24. Mai 2017

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Bundesbank Head Says ECB Needs to Be Ready to Rein In Stimulus

Posted by hkarner - 24. Mai 2017

Date: 23-05-2017
Source: The Wall Street Journal

But Jens Weidmann says easy-money policies are currently appropriate

President of the German Bundesbank, Jens Weidmann

The European Central Bank shouldn’t wait too long before withdrawing its large
monetary stimulus, German central-bank president Jens Weidmann warned on Monday, wading into a debate over how quickly the ECB should signal a policy shift.

Pressure has been building in Northern Europe for a policy change from Frankfurt as the region’s economy picks up. Eurozone inflation recently jumped to 1.9%, within the ECB’s target range, after languishing close to zero for years.

But top ECB officials have yet to signal they are ready to change course and start winding down their €60 billion-a-month bond-purchase program, known as quantitative easing or QE. ECB President Mario Draghi says the topic hasn’t even been discussed by the bank’s 25-member governing council. Den Rest des Beitrags lesen »

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The $9 Trillion Question: What Happens When Central Banks Stop Buying Bonds?

Posted by hkarner - 11. Mai 2017

Date: 10-05-2017
Source: The Wall Street Journal

Central banks have been the world’s biggest buyers of government bonds and may soon turn into sellers

Recent data showed that the European Central Bank holds total assets of $4.5 trillion, more than any other central bank ever. Above, the ECB headquarters in Frankfurt.

Central banks have been the world’s biggest buyers of government bonds and may soon turn into sellers—a tidal shift for global markets. Yet investors can’t agree on what that shift will mean.

Part of the problem is that there is little agreement about how the massive stimulus policies, known as quantitative easing or QE, affected bonds in the first place. That makes it especially hard to assess what happens when the tide changes. Den Rest des Beitrags lesen »

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How to preserve the benefits of central-bank autonomy

Posted by hkarner - 28. April 2017

Date: 27-04-2017
Source: The Economist

Twenty years after the Bank of England was given independence, the powers of central banks are in the spotlight

ON MAY 6th 1997 Gordon Brown, freshly installed as Britain’s chancellor of the exchequer, announced that he was giving the Bank of England the responsibility for setting interest rates. The bank would be charged with meeting an inflation target set by the government.

The move was hailed as a political masterstroke. It gave substance to the new Labour government’s claims to economic competence. Long-term borrowing costs fell sharply. The pound soared. The bank’s governor, Eddie George, was delighted. But joy was not unconfined. Within weeks Mr Brown, wary of an over-mighty central bank, stripped it of its responsibilities for bank regulation and public-debt management. Den Rest des Beitrags lesen »

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A World Turned Inside Out

Posted by hkarner - 27. April 2017

 

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An abundance of money enhances economic efficiency and financial stability

Posted by hkarner - 14. April 2017

Date: 12-04-2017
Source: The Economist
Subject: Why the Federal Reserve should keep its balance-sheet large

HOW much money should exist? The Federal Reserve must soon confront this deep question. The Fed has signalled that towards the end of 2017 it will probably begin to unwind quantitative easing (QE), the purchase of financial assets using newly created bank reserves. The central bank’s balance-sheet swelled from about $900bn on the eve of the financial crisis to about $4.5trn by 2015 as it bought mortgage-backed securities and government debt (see chart). If and when the Fed shrinks its balance-sheet, it will also retire the new money it created.

Economists such as Milton Friedman popularised the study of the quantity of money in the 1960s and 1970s. By the financial crisis, however, the subject had gone out of fashion. The interest rate, it was agreed, was what mattered for the economy. The Fed varied the supply of bank reserves, but only to keep rates in the market for interbank loans where it wanted them to be. Den Rest des Beitrags lesen »

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As Easy-Money Era Winds Down, Investors Bet on Growth

Posted by hkarner - 20. März 2017

Date: 19-03-2017
Source: The Wall Street Journal

Exuberant U.S. markets are in some cases offsetting central banks’ shift away from low rates

Global stock markets as a whole have rallied over the past half year.

Central banks around the world are signaling a move away from ultra-easy money, but financial markets are responding as if the low-interest-rate party isn’t stopping.

A day after the Federal Reserve raised short-term interest rates a quarter percentage point, the People’s Bank of China raised a suite of key short-term interest rates and the Bank of England signaled that an increase in rates may not be far off. Turkey also raised a lending rate, while central banks in Japan, Norway and Indonesia held rates steady.

The events marked a striking turn from the low-interest-rate policies many central banks ushered in as recently as last year to spur markets and slow-growing economies. Low rates make it cheaper for businesses and individuals to borrow, spend and invest and tend to push up the value of asset prices like stocks. Den Rest des Beitrags lesen »

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European Central Bank’s Mario Draghi Learns the Limits of ‘Whatever It Takes’

Posted by hkarner - 12. Dezember 2016

Date: 12-12-2016
Source: The Wall Street Journal By SIMON NIXON

Political opposition to what the ECB has been doing has become too vocal to ignore, Simon Nixon writes

When the history of the eurozone is written, the events of last week may come to be seen as pivotal.

European Central Bank President Mario Draghi insists the package of measures he announced Thursday didn’t amount to a tapering of the ECB’s quantitative-easing program—at least not in the strict sense of starting a process of reducing bond purchases to zero. Indeed, the ECB could even be said to have loosened monetary policy further: By opting to buy €60 billion ($63.4 billion) of government bonds a month for nine more months rather than €80 billion for six months, the ECB has committed to injecting €60 billion more cash into the eurozone economy than the market had been expecting. The ECB’s decision to start buying government bonds with a maturity of just one year and to buy bonds yielding below its own deposit rate has also led to a steepening of yield curves, delivering a boost to bank margins that should feed through to credit supply. Den Rest des Beitrags lesen »

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Europe’s comfort blanket is being pulled away

Posted by hkarner - 9. Dezember 2016

The long-feared moment of bond tapering in the eurozone has arrived. The comfort blanket is being pulled away – gently – for the first time since the region first crashed into a debt crisis.

The European Central Bank has tried to cushion the blow with dovish rhetoric and a glacially slow exit but there is no denying that monetary policy has reached a critical turning point. „The ECB has delivered an unwelcome surprise,“ said Luigi Speranza from BNP Paribas.

Europe’s incipient tightening has begun just as the US Federal Reserve prepares to raise interest rate next week, probably the first of several rises over the next twelve months as the incoming Trump administration launches a fiscal boom.

It comes as China takes action to choke off a property bubble and rein in shadow banking. The world’s three big monetary blocs will all be draining liquidity at the same time. Den Rest des Beitrags lesen »

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Europe’s Secret Bailout

Posted by hkarner - 28. November 2016

 

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