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(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Every August, investors around the world obsess over what’s going on in a tiny Wyoming resort on the edge of the magnificent Teton mountain range. They have good reason to do so.Over the past two decades, central bankers have used the Federal Reserve Bank of Kansas City’s annual symposium in Jackson Hole to plot out and signal changes in monetary policy.With global recession fears growing and bond yields tumbling, this week’s gathering is one of the most anticipated in years.Fed watchers expect Chairman Jerome Powell to suggest that the central bank is ready to reduce interest rates further when he delivers the opening address to the conference on Friday.Here are some highlights from recent gatherings of the central bank clan in Wyoming:2014European Central Bank President Mario Draghi laid the groundwork for quantitative easing in his address, warning that inflation expectations had deteriorated and assuring his audience the ECB “will use all the available instruments needed to ensure price stability.” The ECB launched QE the following year and bought over 2.6 trillion euros of mostly government bonds.2012Fed Chairman Ben Bernanke signaled a third round of quantitative easing was on the table in his speech at Jackson Hole at which he defended the effectiveness of the Fed’s controversial bond purchases. Calling the costs of unconventional polices “manageable,” he said officials should not rule out their future use. The Fed launched QE3 the next month.2008As the financial crisis raged, Bernanke frequently left the formal conference proceedings to discuss market developments with key lieutenants, including Fed Vice Chairman Donald Kohn and New York Fed President and later Treasury Secretary Timothy Geithner. “We tried to remain inconspicuous by leaving the conference at different times,” Bernanke recalled in his 2015 memoir of the period.2007In his opening speech, Bernanke put an interest rate cut squarely on the table by recounting the toll that the slumping house market had taken on the economy and by stressing the importance of “well-functioning financial markets.” The central bank slashed rates by a half percentage point the following month, the first in a series that eventually lowered the Fed’s target to near zero.2005In a symposium mainly given over to extolling the record of departing Chairman Alan Greenspan, University of Chicago economist Raghuram Rajan warned about excessive risk-taking by asset managers seeking to boost their compensation. Former Treasury Secretary Lawrence Summers sharply criticized Rajan’s paper for its “slightly Luddite premise.” But Rajan, who went on to become governor of India’s central bank, proved to be prescient as financial markets were engulfed by turmoil a few years later.1999Then-Princeton University professor Bernanke and Mark Gertler of New York University made the case for the Fed pursuing a strategy of “flexible inflation targeting,” arguing that such an approach could achieve both macroeconomic and financial stability. In the event, the Fed did adopt a 2% inflation target in 2012, after Bernanke became chairman.\--With assistance from Zoe Schneeweiss.To contact the reporter on this story: Rich Miller in Washington at firstname.lastname@example.orgTo contact the editors responsible for this story: Margaret Collins at email@example.com, Alister Bull, Jeff KearnsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The Chinese yuan's slump to an 11-year low also sapped their appetite for risk, with dealers saying state-owned banks were seen selling dollars to support the yuan. The MSCI world equity index, which tracks shares in 47 countries, was down 0.1%. Minutes of the Fed's July meeting showed deep splits among policymakers over whether to cut interest rates last month, though there was some unity in wanting to signal it was not on a preset path to looser policy.
New Delhi, Aug 22: Weakening of domestic growth impulses prompted the Reserve Bank of India (RBI) governor Shaktikanta Das to opt for an unconventional rate cut of 35 basis points (bps) to push economic activities early this month, said the central bank on Wednesday. Two of his RBI colleagues and an independent member in the rate-setting Monetary Policy Committee (MPC) had also favoured a 35 bps reduction, against the normal practice of 25 or 50 bps change, in the third bi-monthly monetary policy of 2019-20. The other two members, both independent, in the six-member MPC had voted for a 25 bps cut in the policy announced on August 7. In an unusual move, the RBI on August 7 had reduced the benchmark
Singapore: Minutes from the Reserve Bank of India's August meeting has revived expectations for further policy easing as headline inflation is likely to remain within target over the next one year, says a DBS report. According to the report, pro-growth Reserve Bank of India (RBI) minutes are expected to cap bond yields. "INR 10Y (generic) government bond yields are likely to stay below 6.7 per cent after RBI minutes revived expectations for further policy easing," Radhika Rao, Economist, and Eugene Leow, Rates Strategist at DBS Group Research said in the report. Weakening growth was a dominant worry for policy makers amid weaker global activity, they noted. "With RBI projecting inflation at below
Minutes from the Reserve Bank of India's August meeting has revived expectations for further policy easing as headline inflation is likely to remain within target over the next one year, says a DBS report. According to the report, pro-growth Reserve Bank of India (RBI) minutes are expected to cap bond yields. "INR 10Y (generic) government bond yields are likely to stay below 6.7 per cent after RBI minutes revived expectations for further policy easing," Radhika Rao, Economist, and Eugene Leow, Rates Strategist at DBS Group Research said in the report. Weakening growth was a dominant worry for policy makers amid weaker global activity, they noted. "With RBI projecting inflation at below target
Headline indices of the Japan share market marginally advanced on Thursday, 22 August 2019, as risk sentiments bolstered by gains overnight in Wall Street on a dovish signal from the Federal Reserve. However, market gains were limited after preliminary business survey data showed manufacturing activity in the country shrank for a fourth straight month in August. Around late afternoon, the 225-issue Nikkei Stock Average rose 29.30 points, or 0.14%, to 20,647.87, while the broader Topix index of all First Section issues on the Tokyo Stock Exchange added 0.31 point, or 0.02%, at 1,497.82. Total 15 sub-indexes out of 33 sub-indexes of Topix index industry category retreated into positive territory,
London: Goldman Sachs Group Inc economists predict Federal Reserve officials will cut interest rates at each of their next two meetings — in part because of a desire to keep bond markets calm. Having lowered their benchmark rate by 25 basis points to 2-2.25 per cent in July, policy makers will execute reductions of the same size in September and October with risks tilted toward more and/or bigger cuts, Jan Hatzius and Sven Jari Stehn said in a report released late Tuesday. As well as uncertainty over the US-China trade war, the economists rationalise their call by arguing the central bank is in a hall of mirrors in which officials place greater weight on bond-market pricing when making decisions
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European shares tracked Asian markets lower on Thursday, as sentiment was cooled by U.S. Federal Reserve minutes that showed policymakers viewed last month's cut in interest rates as a recalibration not the start of sustained monetary easing. The industrial sector slipped 0.59% and pressured the pan-European STOXX 600 index, which fell 0.3% by 0706 GMT. The Federal Reserve minutes on Wednesday showed policymakers were deeply divided over whether to cut rates in July, but united in wanting to signal they were not on a preset path to more cuts.
Australia and New Zealand's central banks are pondering what until recently seemed unthinkable: deploying the types of extreme monetary policies that were spawned globally by the 2008 global financial crisis. Bond-purchase programs and negative interest rates were for years seen Down Under as the preserve of countries that had gorged on risky derivatives and been reckless with debt. There's been a sharp change of tune, however. Now, the two central banks are at the forefront of what appears to be a race to the bottom -- where even interest rates at zero may not be far enough. 1. What's changed? Only last year, the RBA and RBNZ signaled their next rate move would be up. But China's slowing economy,
The decision to cut rates in July appears a tough call for the Fed. It appears grounded in future downside risks more than the present data, and two policy markers clearly dissented from the decision. Here's what we learned from the minutes. Things Are Currently Pretty Good The Fed is worried mostly about the future, not the present. They see job growth and robust consumer spending. Business investment and manufacturing is indeed soft today. Yet, it's rare to have everything moving in the right direction at once. Inflation is a little muted and the Fed would like it higher. If there is one thing the Fed is worried about today, it's manufacturing, beyond that though, things are pretty rosy. In
All three internal members in the monetary policy committee (MPC), including Governor of the Reserve Bank of India (RBI) Shaktikanta Das, voted unanimously for a cut of 35 basis points, to support economic growth. Minutes of the meeting released on the central bank website showed Das viewed a 50 basis points cut indicating a “knee-jerk reaction” and being excessive, while 25 basis points to be inadequate. “Given the current and evolving inflation and growth scenario at this juncture, it can no longer be a business-as-usual approach. The economy needs a larger push,” Das said. Newly inducted MPC member, Deputy Governor B P Kanungo, in place of Viral Acharya, found merit in the governor's argument