after central banks

FED - FOMC

At yesterday's meeting of the FOMC added to the message, the following sentence:

"The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term."

It would seem that this is a significant change in policy direction, and perhaps even withdrawal announcement limit of QE. Given that Fed sees the negative impact of inflation is too low, maybe you will want her to do? 

However, one should know the origin of this phrase.

In June, against the Communication voted not only the hawk George, but also influential James Bullard. He argued that in view of low inflation, Bernanke should not limit of QE. In Fed is the rule of consensus. Although members are cut off from communication, but it is assumed that more than one dissenter this is a "hit" to Mr Chairman. Added sentence is therefore nothing more than the price for voice Bullard, especially since the second part shows clearly that the majority of the Committee does not share his concern.

For the Fed and the markets will be key figures, and these are good for now. Economic growth accelerated in the second quarter to 1.7%, and could be even higher if not for a large increase in imports, which in part is temporary. What is even more important, the labor market seems to be getting stronger. ADP report showed an increase in employment in the private sector by 200 thousand. - most of this year. If so, the chances of reducing QE in September will grow.

EBC

A month ago, the ECB introduced a formulation that the Bank for an extended period of time (the famous "extender period") will not raise interest rates. This formulation was designed to stop the growth yield on debt in euros, which followed in the wake of such a movement in the United States. ECB head Mario Draghi not surprised this time. Changes in monetary policy, of course, it was not, the ECB president, during his conference also has not changed the rhetoric of the last occurrence. Overall, the message of EBC was dovish. An interesting fact is that the ECB may already be in the fall will introduce a record of its meetings in order to become more transparent.

BOE

Another highlight today was the second meeting of the Bank of England under the leadership of Mark Carney. BoE did not issue the "forward guidance" document that is talking about the future of monetary policy in the UK. Will be announced next week.

best regards,

oscarjp