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Economy
Multiple Fed officials now signalling rate hikes
Perhaps we are misreading the Fed’s intentions going forward because multiple Fed officials are signaling the Fed’s intention to raise interest rates multiple times in 2016 and 2017. And while rate hikes are usually considered tightening,…
The new normal that never was
The extended period of low growth following the Global Crisis was denoted the ‘New Normal’ by some. This column argues that the period is still ongoing, and would be more usefully described as the ‘New Abnormal’. Far from being an…
Low interest rates and banks’ net interest margins
Since the Global Crisis, interest rates in many advanced economies have been low and, in many cases, are expected to remain low for some time. Low interest rates help economies recover and can enhance banks’ balance sheets and performance,…
Negative interest rates are just a tax on reserves that lowers net interest margins
The primacy of monetary policy continues unabated as central banks go further and further down the rat hole of increasingly desperate measures to boost demand. First, it was quantitative easing. Now, the latest scheme is negative interest…
The titillating and terrifying collapse of the dollar. Again.
This post was originally published at China Financial Markets.
By Michael Pettis
Foreign perceptions about the Chinese economy are far more volatile than the economy itself, and are spread across a fantastic array of forecasts. On one…
Job growth is slowing, so when will the Fed hike rates?
The latest jobs report came in at 160,000 jobs added to US non-farm payrolls. As this number was below expectations, it effectively sidelines the Fed in June. And given we are in an election year, the chances of two rate hikes occurring are…
Where would the US be today without the shale stimulus?
When one thinks about why the US has outperformed, a lot of the analysis is destined to focus on fiscal and monetary policy. And while I think that’s an important thought process to go through, I believe that bank recapitalization and shale…
The Bank of Japan’s inaction and the Fed’s tightening bias with GDP slowing
Soft data in the US and Japan was not enough to spur central banks in either country into action over the last two days. For me, it highlights first how vulnerable the global economy is. But, more than that, it points to the ineffectiveness…
Fed policy in an election year of slowing growth
US and global economic growth is slowing. And this has caught the Fed out given its rate hike in December. The question, now, therefore is whether the Fed continues to hike in the face of this slowing, given the election looming in…
Is the Fed panicked about the downshift in the US economy?
The minutes from the Federal Reserve Board's last meeting have come out and they are dovish. While on the one hand, we should praise the Fed for showing it is data-dependent as it has professed to be, on the other hand the abrupt change in…