“Helicopter money” – reality bites

Commentary by Mr Claudio Borio, Head of the Monetary and Economic Department of the Bank for International Settlements, and Mr Piti Disyatat, Executive Director of the Puey Ungphakorn Institute for Economic Research, Bank of Thailand, in Nikkei Asian Review, published on 4 September 2016. Since the Great Financial Crisis, central banks in the major economies have…

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Monetary Policy and Inequality

Monetary Policy and Inequality Pedro Amaral Cleveland Fed,01.10.17         This Commentary examines the link between monetary policy and income and wealth inequality by reviewing the theoretical channels that have been proposed and examining the empirical evidence on their importance. The analysis suggests that the magnitude of any redistributive consequences of conventional monetary…

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Good news, bad news from December Jobs Report

I had been meaning to write about the December Jobs Report, which was released last Friday, but I hadn't gotten around to it. The report had elements of both good news and bad news.

The good news is the December report showed a solid market. True, the headline Non-Farm Payroll figure missed market expectations, but November was revised upwards, and the positive revision in November was bigger than the December miss.

In conjunction with the December Jobs Report, the Council of Economic Advisers released a report indicating that the American economy had added more jobs than other advanced economies in the last eight years (via Business Insider).

Notwithstanding the political victory lap nature of the CEA`s report, the December Jobs Report should keep the Fed on track with its expectations of three rate hikes in 2017.

Here is the bad news. There are worrisome signs that the economy is starting to overheat. The combination of Fed actions on interest rates and wage pressures on operating margins are likely to be unfriendly to the stock market. Unless the Trump administration comes through on their promised tax cuts in the near future, upside for equity prices will be limited in 2017.

The full post can be found at our new site here.

Central Bank Independence: Growing Threats

Central Bank Independence: Growing Threats Cecchetti & Schoenholtz Money and Banking, January 02, 2017       “The independence of the central bank to set a monetary course separate from the day-to-day of electoral politics is as fragile as it is essential.” Peter Conti-Brown   The median FOMC participant forecasts that the Committee will raise…

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How Important Is Information from FOMC Minutes?

How Important Is Information from FOMC Minutes? Fernanda Nechio and Daniel J. Wilson FRBSF Economic Letter 2016-37 | December 19, 2016       To foster transparency and accountability in monetary policy, the Federal Open Market Committee publishes a statement immediately following every FOMC meeting, followed by the full minutes of the meeting three weeks…

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Meanwhile, Back on Earth

Same old FOMC yesterday with a lot of wind, a lingering smell, and a vast amount of analysis of a move that was difficult to detect without a microscope, and is largely irrelevant to real world interest rates in any case. Moving on … SPX tested my target trendline for this move on Tuesday and […]
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