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Central Banks' Independence

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craibern

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Most First World countries have accepted the merits of maintaining the independence of central banks to help guide a nation's economy smoothly, by taking appropriate measures to dampen inflation and to maintain a balance in growth and unemployment. President Trump's latest tweets suggest that he may curtail the Fed's indepenence in making interest rate decisions. He is unhappy that the Fed's broad plan to raise interest rates in smooth steps over the next few months, will further strengthen the dollar, which, in turn, would make exporting more difficult for the U.S. The market reacted immediately overnight and the dollar dropped noticeably. The question remains whether this will be a short blip or sustained effect. My view is that it will be short-lived. The international conference of central bankers, which comes up shortly, may include some interesting speeches!

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#1 - August 21, 2018, 07:12:26 AM

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I was thinking about this too recently. I am far from an expert when it comes to the Fed and interest rates, but the higher interest rate also makes it more difficult to pay back money borrowed by the government. It has also been said that higher interest rates are the pin that pops bubbles (eg. Stock market). If I remember correctly, they started to increase the rate right before Obama left. That would make sense then because all the blame could be passed on to the next president. So far, it hasn't worked out and nothing has popped though. The US economy is running better than it has in a long time and Trump actually mentions about paying the debt down. Like I said, I am no expert in this subject, but those are my thoughts. I do believe that the charts already hold the answers and whatever will happen will happen no matter what news comes out or who tweets what.
#2 - August 21, 2018, 01:10:12 PM
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Fxortrader

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British stocks have a good day, with the FTSE 100 moving from strength to strength because the morning has already taken place.

Shortly before noon, the benchmark UK stock index rose 106.95 points, or 1.5%, at 7,141.08.

The index was given an initial boost by better-than-expected BP results, which have pushed oil giant shares up more than 5%.

Stocks were also boosted after the pound fell back after a disappointing survey of the UK service sector.

Sterling is currently down 0.25% against the dollar at $ 1,3004.

Stocks often rise when sterling falls, as weaker currencies lift the value of corporate foreign earnings when they are brought back to Britain and converted back to pounds
#3 - February 08, 2019, 05:41:04 AM

mohammad mmufroil

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Quote from: craibern on August 21, 2018, 07:12:26 AM
Most First World countries have accepted the merits of maintaining the independence of central banks to help guide a nation's economy smoothly, by taking appropriate measures to dampen inflation and to maintain a balance in growth and unemployment. President Trump's latest tweets suggest that he may curtail the Fed's indepenence in making interest rate decisions. He is unhappy that the Fed's broad plan to raise interest rates in smooth steps over the next few months, will further strengthen the dollar, which, in turn, would make exporting more difficult for the U.S. The market reacted immediately overnight and the dollar dropped noticeably. The question remains whether this will be a short blip or sustained effect. My view is that it will be short-lived. The international conference of central bankers, which comes up shortly, may include some interesting speeches!
A trump statement that wants the Fed not to raise interest rates even greater is indeed true because with a high dollar increase making domestic production quiet from overseas buyers, this action can make workers lose their jobs because the company will lose money

because of the high value of the dollar, in this case the Fed bank wants the American economy to be stronger but the fact that the increase in interest rates itself can make the American economy weaker in the future
#4 - February 13, 2019, 04:58:46 PM
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