No surprises from the Federal Reserve Wednesday the FOMC left rates unchanged rates in the 1.00%-1.25% range and announced they will taper. The Fed will begin to unwind the $4.5 trillion balance sheet in October, as expected.
European Stability Mechanism (ESM) chief Klaus Regling is over in London pushing the latest wunder tool for crises, 10 years after we are still trying to solve the Greece crisis. Regling wants a ‘rainy day’ fund to counter “asymmetric shocks in the euro zone.
ECB begins talks about ending its QE program with ‘bulk of decisions’ expected in October. The ERO moved above $1.2030 as the ECB kept rates unchanged.
The Bank of Canada is raising its target for the overnight rate to 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
The Reserve Bank of Australia has kept its cash rate on hold at a record low of 1.5%. “Our judgement has been that it was not in the public interest to encourage an already highly-indebted household sector to borrow even more,” RBA governor Philip Lowe said.
The US dollar had been rallying ahead of Janet Yellen’s speech on financial stability at Jackson Hole, 100 pips in USDJPY and EURUSD. Her speech brought nothing new or dramatic and the dollar sold off immediately.
Federal Reserve Bank of Dallas President Robert Kaplan speaking on Inflation and labor gave color to Fed economists study Getting a Jump on Inflation was released. How technology and the U.S. debt level is impeding inflation.
The FOMC minutes from the last meeting in July underscore just how confused the majority of the Fed is about what inflation is not higher. The US dollar reacted negatively. Most Fed officials also support a balance sheet move at the next FOMC meeting.
The Bank of England (BOE) Monetary Policy Committee (MPC) left interest rates unchanged and QE on hold with a vote of 6-2 Thursday. The British pound fell 120 pips on the news.
Cleveland Fed President Loretta Mester commented on rates and inflation. These are interesting in light of the recent weak inflation numbers and the tumbling U.S. dollar, says 3 hikes a year appropriate.