U.S. equity prices continue to rise as a benign short-term interest-rate policy holds sway.
Later that day, the BOJ made a U-turn on its zero interest-rate policy and raised rates by 0.25%.
Don't expect the Federal Reserve to end its low-interest-rate policy anytime soon.
One explanation for all the confusion is that it reflects a deeper uncertainty about why the Bank adopted its zero interest-rate policy in the first place.
Minutes from the latest meeting of the Federal Open Market Committee, the central-bank panel that sets interest-rate policy, indicate a rate-cut idea has been around for a while.
When the bank took over interest-rate policy from the Treasury in 1997, it gave up its role as manager of public debt as well as its job supervising banks.
It was shoved back into recession partly by its own policies: an ill-timed tax increase in 1997 and the (temporary) ending of the Bank of Japan's zero-interest-rate policy in 2000.
He is highly regarded by economists in the Fed and on Wall Street, and having worked with Mr Greenspan for so long, his thinking on interest-rate policy and financial markets is also close to the chairman's.
Eurobanking means one short-term-interest-rate policy for all.
Indeed, studies have shown that even when emerging-market economies say they are floating (as Malaysia, for example, used to), they tend to rely more heavily than the industrial countries do on interest-rate policy and foreign-exchange market intervention to limit actual movements in the exchange rate.
Two decades of stimulative, low-interest-rate fiscal policy have made Japan the most indebted nation in the developed world, and as new Prime Minister Naoto Kan recently said, in his first address to Parliament, that situation is not sustainable.
Instead, GM has become what one might call America's subprime auto maker, increasingly dependent on cheap credit, fueled by the Federal Reserve's near-zero interest rate policy, to support its made-in-China production strategy.
Per market strategist Dave Rosenberg, interest income has declined by three percent over the past year as the Fed continues to enforce their near-zero interest rate policy.
The Federal Open Market Committee meets Tuesday to discuss its record-low interest rate policy.
That used up the traditional interest-rate channel of monetary policy, but not the more direct channel of money supply growth.
The Item Club says that the change should be used by the Treasury to "review the remit" that it gives the Bank's interest rate-setting Monetary Policy Committee.
For example, the Goldman Sachs monetary-conditions index (based on a weighted average of short-and long-term interest rates and the trade-weighted exchange rate) suggests that America's monetary policy is currently at its tightest since 1989, largely reflecting the strong dollar.
The minutes of the latest meeting of the bank's monetary-policy committee suggest that it will raise its benchmark interest rate in March or April, for the first time since September 2008.
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The Fed's interest-rate cuts in response to August's turmoil thus represented an easing of policy at a time when many emerging economies were already booming.
Yet, although the full impact of the Fed's interest-rate cuts so far this year has still not been felt, looser monetary policy alone is unlikely to be enough to fend off recession.
Wen said the government is focused on stabilizing the economy and will use fiscal policy such as value-added taxes, acceleration of interest rate reform and wider involvement of private investment in the economy rather than government spending increases.
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In addition, the Fed extended its outlook for where it will hold interest rate to mid-2015, saying it will keep its ultra-loose monetary policy.
The Fed's interest rate-setting committee will begin a two-day meeting Tuesday and will issue a policy statement once its meeting ends Wednesday afternoon.
Weighing on the benchmarks this week, minutes from the Federal Reserve's latest policy meeting released Wednesday showed some officials were concerned about the consequences of low-interest-rate policies meant to help revive the economy.
An interest-rate gap is opening between currencies like the dollar and the yen on the one hand, where monetary policy is likely to remain ultra-loose, and higher-yielding ones like the euro on the other.
Thus the interest rate that the Fed pays should tend to put a floor under short-term market rates, including our policy target, the federal-funds rate.
Other than policies tied to current and expected future values of the overnight interest rate, the Federal Reserve has--and indeed, has been actively using--a range of policy tools to provide direct support to credit markets and thus to the broader economy.
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