During his campaign, US President Donald Trump was short on praise for Federal Reserve Chair Janet Yellen. But since taking office in January, he has softened his public remarks about her low interest-rate policies, and there is even the possibility that he might re-nominate her in 2018. Would the reappointment of an avowed monetary-policy dove work for or against his economic plans in the future?
US Federal Reserve
Trying times can inspire groundbreaking reform, and today’s economic climate may demand a radical strategy. Approaches such as universal basic income, deposit accounts held at central banks, and monetary policy through direct transfers may be what is needed to effectively address stubborn conditions that could turn perilous in the days ahead.
At the beginning of 2017, the European Central Bank (ECB) confirmed that it will keep its benchmark rate unchanged at 0 percent and its deposit rate at -0.4 percent. To sustain European economies, the ECB will also continue its bond-buying program with 80 billion euros (US$85 billion) per month until the end of March.
United States President Donald J. Trump received an unexpected valentine last week from Janet Yellen, chair of the Board of Governors of the Federal Reserve System. The higher interest rates President Trump pledged through jawboning the Federal Reserve are coming.
If it seems as if the world has changed, it is because it has. Economic growth, for example, lags behind the levels reached before the 2007/2008 financial crisis even in developed countries. The need for governments to step in with proactive fiscal policies to kick start their economies has never been greater.
Anemic economic growth in advanced economies has led central banks to prescribe loose monetary policy that has not produced the cure. The problem may lie more on the supply than demand side; digital innovation in industrial operations if properly implemented could lead to the transformative revolution that will boost productivity and revive economic performance.
The developed world’s economy has decelerated since the great financial crisis (GFC) of 2008, and despite the efforts of governments and central banks, growth rates have stagnated while inflation remains well below target.
The November elections are soon approaching for Americans, and it now looks increasingly like a two-horse race for the US presidency. Both Hillary Clinton and Donald Trump have emerged as clear contenders in the last few weeks, leaving their rivals by the wayside.
Earlier this year, the European Central Bank (ECB) decided to cut its deposit rate to -0.4 percent and its benchmark refinancing rate to zero.
No need to tear up the script yet on the 2016 outlook, despite the weakest ever first-week start to the year for US equity markets.