Generally, the strong pound has been a burden on UK manufacturing, and the Bank of England seems to be taking this into account when deciding on monetary policy.
The longer-term challenge for the Fed and other central banks is to build a new monetary-policy framework that takes account of recent structural changes in the global economy, such as the integration of China.
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Mr. Subbarao, while speaking at an event in the western Indian city of Ahmedabad, said the RBI will factor in the current-account gap while formulating its monetary policy.
Commodities have been rising on account of demand and loose monetary policy in the US, in particular, where near-zero capital costs have weakened the dollar and turned money managers onto hard assets like oil, gold, and agricultural commodities.
The idea that central banks need to take account of asset prices when setting monetary policy is hardly new.
ECONOMIST: Should central banks try to target asset-price inflation?
But there is already a strong case for the Fed to take account of asset prices in setting monetary policy (see article).
However, Bill Dudley of Goldman Sachs argues that if the monetary-conditions index is adjusted to take account of the stockmarket, it paints a very different picture.
The economy requires monetary stimulus, while additional stimulus is unlikely on account of the need to contain inflation.
Over-payment fraud, the victim receives an invalid monetary instrument with instructions to deposit it in a bank account and send excess funds or a percentage of the deposited money back to the sender.
Further contributing to the disturbing trend against monetary freedom and financial privacy are initiatives like the Foreign Account Tax Compliance Act ( FATCA), which has been written about many times on these pages and also in The New York Times.
The Crisis countries have achieved substantial current account surpluses, making possible a significant easing of monetary and fiscal policies.
With stimulative fiscal and monetary policy bolstering domestic demand, China's current-account surplus has shrunk by two-thirds, from 10% of GDP in 2007.
The International Monetary Fund expects the BRIC nations, not counting South Africa, to account for 21.6% of world GDP by 2015.
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It is past time for the Federal Reserve and the advocates of the paper dollar to be held to account for the complete and utter failure of their grand experiment in monetary manipulation made possible by severing the final link between the dollar and gold by President Richard Nixon in 1971.
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Yet some of the whiff of inflation has dispersed on account of a collapse in commodity prices leaving the path clear for steady monetary policy for as far as the eye can see.
Fiscal and monetary stimulus, which jolted domestic demand, has caused China's current-account surplus to narrow dramatically, from 10.1% of GDP in 2007 to a projected 2.9% this year, according to Nomura, a financial services group, which sees it almost disappearing by 2013.
The BRIC countries, excluding South Africa, are expected to account for 21.6% of world GDP by 2015, according to the International Monetary Fund.
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In 2008 domestic spending was squeezed by higher prices for oil and food (which account for a much higher share of household budgets than in other countries) and by tighter monetary policies, aimed at curbing inflation.
Moreover, even if one accepts that central banks should take account of asset prices only if they are expected to feed into future inflation, America's monetary policy has been too lax.
Labour's Chris Leslie warned that there might be circumstances under which the aims of the Financial Policy Committee, which primarily focuses on financial stability, clashed with those of the Monetary Policy Committee, which mainly deals with inflation-targeting, but is also obliged to take growth into account when making decisions.
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