{"id":2573,"date":"2008-02-28T08:43:56","date_gmt":"2008-02-28T08:43:56","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2573"},"modified":"2025-03-27T15:48:37","modified_gmt":"2025-03-27T15:48:37","slug":"scrap-the-g7-its-not-working","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2573","title":{"rendered":"Scrap the G7 &#8211; it&#8217;s not working"},"content":{"rendered":"<p><font size=\"2\"><\/p>\n<p>Are the Fed and the ECB on different planets?<\/p>\n<p>Yesterday, Fed Chairman Bernanke signalled a further cut in official rates on 18 March despite recent unfavourable inflation news and the 225 bp of policy stimulus already in the pipeline, not to mention a substantial expansionary fiscal package.<\/p>\n<p>Meanwhile, Bundesbank President Weber poured water on hopes of a cut in ECB rates even though credit conditions are as bad in Europe as in the US and growth has moved below trend, with a risk of serious weakness in several Eurozone economies.<\/p>\n<p>This policy divergence looks unsustainable. With the real Fed funds rate approaching historical post-recessionary levels, the US central bank may shift to a neutral bias after the expected March cut. Despite Weber&#8217;s comments, the ECB is unlikely to reverse its recent shift to a more neutral stance at next week&#8217;s meeting. Events continue to play out similarly to 2001 (see <a href=\"http:\/\/www.moneymovesmarkets.com\/journal\/2008\/2\/6\/ecb-ometer-turning-more-dovish.html\">here<\/a> for more), suggesting a rate cut is still plausible by mid-year.<\/p>\n<p>Unsurprisingly, the dollar was a major casualty of yesterday&#8217;s remarks, finally breaking below its November trough in trade-weighted terms. A sharp increase in currency volatility would be unwelcome against a background of continuing turbulence in other financial markets. Greater policy co-ordination would serve both the Fed&#8217;s and the ECB&#8217;s interests.<\/p>\n<p><\/font><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Are the Fed and the ECB on different planets? Yesterday, Fed Chairman Bernanke signalled a further cut in official rates on 18 March despite recent unfavourable inflation news and the 225 bp of policy stimulus already in the pipeline, not to mention a substantial expansionary fiscal package. Meanwhile, Bundesbank President Weber poured water on hopes [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2573","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2573","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2573"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2573\/revisions"}],"predecessor-version":[{"id":4882,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2573\/revisions\/4882"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2573"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2573"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2573"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}