Tapering is coming. And markets know it. The mere thought that tapering of the Federal Reserve’s quantitative easing (QE) program was due in September was enough to push many markets and currencies (especially emerging markets) significantly lower. So the question arises for the occasion of the actual tapering that’s likely to begin in 2014: have markets already reacted to tapering or is there more to come? Read more
Posts tagged ‘Ben Bernanke’
In a recent economic commentary (here’s the link), Bob Baur and I examined the pros and cons of the two top candidates to succeed Ben Bernanke as Chairman of the Federal Reserve: Janet Yellen and Larry Summers. Today, I’d like to use this blog post to examine a few different avenues where Yellen and Summers might differ were each to get the Fed’s top job.
The first way I’d look at this would be from their respective statements on Fed policy. Almost everything we’ve heard from Yellen suggests that she’ll be Spider-Man 2 to Bernanke’s Spider-Man…more of the same, still pretty good, but not saddled with the task of having to explain how this all started. Summers is harder to read. Read more
Several Fed presidents, and “Big Ben” Bernanke himself, have been spending the last week or so trying to convince markets that their program of quantitative easing isn’t on the immediate chopping block and that any eventual tapering would be contingent on continued economic improvement. They’ve tried speeches, press conferences…maybe it’s time for a novelty song, sung to soothe markets back toward normality?
“Tiptoe through the Taper”
by ‘Big Ben’ Bernanke
Panic, after the meeting,
Come tiptoe through the taper with me. Read more
Janet Yellen, the vice chairman of the Federal Reserve, is the latest in a string of Fed bigwigs to get behind an idea of using explicit inflation and unemployment targets to inform the market about the Fed’s future plans – forward guidance, in Fed-speak. During a speech to the Haas School of Business at the University of California, Berkley, Yellen endorsed the idea of moving beyond calendar-date approximations as the means of conveying information on the Fed’s future moves. Now, she stopped short of actually naming any sort of numbers, but this seems like a good direction for the Fed to move. Ms. Yellen knows what she’s talking about too; in 2010, Fed chairman Ben Bernanke appointed her the chair of a new FOMC communications subcommittee. Not to mention that if Bernanke decides not to accept a third term at the head of the Fed, Ms. Yellen is widely seen as first in line as his replacement.