Federal Reserve Chair Janet Yellen and her international counterparts are suffering from a case of what psychologists call confirmation bias: They keep insisting inflation will accelerate even as it continues to ebb. That's the diagnosis of Ethan Harris, co-head of global economics research at Bank of America Corp. in New York. He says central bankers are seeing what they want to see by blaming subpar inflation in their countries on temporary, partly home-grown forces. That risks ignoring more lasting, global influences ranging from weak worldwide demand and more emerging-market competition to cheap labor in developing nations, cooling commodity prices and technological breakthroughs. "There is much lower-than-expected inflation showing up in too many places in the world to dismiss it as transitory," said Allen Sinai, chief executive officer at consultant Decision Economics Inc. in New York. Almost two-thirds of the 121 economies tracked by Bloomberg are experiencing smaller gains … [Read more...] about Central banks see what they want in ignoring deflation
European central bank exchange rate
Three central banks take action in sign of alarm
China, the euro zone and Britain loosened monetary policy in the space of less than an hour on Thursday, signaling a growing level of alarm about the world economy, although suggestions of coordinated action were played down. Of the three, the surprise move was from Beijing which lowered its lending rate by 31 basis points to 6 percent following an interest rate cut just a month ago that also came out of the blue. The European Central Bank cut rates to a record low 0.75 percent following a dire run of economic data. But it steered clear of bolder moves such as reviving its government bond-buying program or flooding banks with more long-term liquidity. Still, a Reuters poll found the ECB is expected to follow the rate cut with more steps to help the region's economy in coming months. The Bank of England, whose rates are already at a record low 0.5 percent, said it would restart its printing presses and buy 50 billion pounds ($78 billion) of assets with newly created money to help … [Read more...] about Three central banks take action in sign of alarm
Central banks shoot 45-minute stimulus salvo as growth slows
Global central banks went on the offensive against the faltering world economy, cutting interest rates and increasing bond buying as a round of international stimulus gathers pace. In a 45-minute span, the European Central Bank and People’s Bank of China cut their benchmark borrowing costs, while the Bank of England raised the size of its asset-purchase program. Two weeks ago, the Federal Reserve expanded a program lengthening the maturity of bonds it holds and Chairman Ben S. Bernanke indicated more measures will be taken if needed. “The actions had the look and feel of a coordinated global easing campaign,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. “The central banks are trying to arrest the synchronized slowdown in global economic growth that has taken shape.” Almost five years since the financial crisis first forced them into action, policy makers are reacting anew as Europe’s debt crisis persists, US hiring … [Read more...] about Central banks shoot 45-minute stimulus salvo as growth slows
Dollar strengthens as central bank lifts rate
The dollar strengthens at commercial banks on Monday. — Photo vietq.vn HA NOI (Biz Hub) — The US dollar strengthened at domestic commercial banks on Monday, following an increase in the reference exchange rate that the State Bank of Viet Nam adjusted for the day. The central bank set the reference rate for Monday at VND21,866 per dollar, rising by 21 dong from last weekend's level. With the current trading band of plus or minus 3 per cent applied for the rate, a dollar can domestically be traded between VND21,210 and VND22,522. Almost all commercial banks increased the dollar rates in the morning, reported Nhip cau Dau tu (Investment Bridge) online. Vietcombank listed the buying price at VND22,310 per dollar and the selling price at VND22,380 per dollar, both 15 dong higher than the previous session's levels. VietinBank maintained the selling price at VND22,370 per dollar, but increased the buying price by 30 dong at VND22,300 per dollar. Sacombank quoted the buying … [Read more...] about Dollar strengthens as central bank lifts rate
Pressure mounts on European Central bank
Debt, growth and credit ratings dominated markets which rallied slightly on Thursday as the European Central Bank faces up to a new eurozone crisis and the US economy struggles for traction. A man reads documents at Madrid\'s stock exchange. Spain, hit by record-high borrowing costs, risked a closely watched bond issue to raise 3.0-4.0 billion euros but had to pay investors much more again to raise the funds, highlighting the eurozone\'s funding problems.The other eurozone country in the firing line, Italy was also in sharp focus after Prime Minister Silvio Berlusconi said on Wednesday that "we need an immediate action plan of action which responds to the markets."This would add to a crisis budget package of 47.9 billion euros ($68.6 billion) to ward of market pressure last month.He said the markets had "incorrectly" judged Italian debt and growth potential but acknowledged the country needed new measures to reform labour … [Read more...] about Pressure mounts on European Central bank