Janice,
Found your comments here interesting, although, if I may, I disagree with your analysis.
It was quite exceptional and highly effective for Uncle Alan to broadcast what the Fed was going to do, and then do it. This is the credibility European Central Banks have failed to achieve. Even Eddie George at the BOE should take note.
But this is not Uncle Alan at work, it is the end result of many decades of academic and central bank research and experiment, most notably with Alan Walters in the UK (LSE) and Thacther Years, and our very Paul Volker (LSE).
Your prescription of asking the FED to in effect shut up, and then announce rates creates uncertainly - this destabilizes the market.
Janice, I don't expect you to agree, but let's come back to this during the 3rd quarter.
As for the G7 being pissed off with the Fed raising rates, and thus increasing the dollar relative to the others - yes, it does seem counter productive to their "de facto" arrangement recently. But then again, this assumes the G7 can actually change the exchange rate market - this has never happened ove the long haul - fundamentals of inflationary expectations and size of the market is just too big for the G7 to significantly affect real exchange rates.
G7 should focus on monetary growth, and fiscal policy --- they should focus on inflationary targets, and stick to them - exactly what the Fed is doing.
All the best,
Fundace |
