Operation Twist hasn’t quite produced expected outcomes but will RBI’s latest attempt buck previous trend?
A successful ‘Operation Twist’ could mitigate that additional need. Past experience, however, shows that success can be a mixed blessing.
At a three-day conference in San Diego on an array of economic topics, one stood out: The textbook view of central banking, where low unemployment produces unwanted inflation that monetary policymakers can counter with interest-rate hikes, is at least badly hobbled if not fully broken
Rates are currently “appropriate,” Powell said in a wide-ranging interview with CBS’s 60 Minutes news show in which he called the current rate level “appropriate” and “roughly neutral,” meaning it is neither stimulating or curbing the economy.
The Austrian School of Economics predicts that America's economic woes cannot be ended with more liberal and free money. But that is exactly what the US Fed may end up doing for fear of another economic collapse.
The question to ask now is by how much will the RBI cut the repo rate by, as and when it does start to do so.
Asia's central bankers are being forced to juggle their day jobs with what their governments have failed to do - steeling their economies for the hard times.
Former Federal Reserve Chairman Ben Bernanke began his new job at the Brookings Institution on Monday, wasting no time getting back to work just three days after ending his tenure as head of the world's most powerful central bank.
Janet Yellen, the first woman to chair the Federal Reserve in its 100-year history, will take over the reins of the U.S. central bank on Saturday but will only formally be sworn in next week, the Fed said on Thursday.
The expectation for the Fed to continue cutting its purchases by $10 billion at each of its meetings this year was unanimous among the 17 primary dealers surveyed following the Federal Open Market Committee's first meeting of 2014.
As widely anticipated, after a two-day meeting which ended on Wednesday, the Fed said it will buy $65 billion a month in Treasury bonds, down from $75 billion.
Many economists think Yellen's big challenge will be deciding how to ease off some of those very policies, which Bernanke took with Yellen's support.
While a narrowing current account deficit has allowed the rupee to withstand the start of reduced bond purchases by the Federal Reserve, analysts say confidence is still low in an Indian economy suffering from low growth and high inflation.
The RBI starting the year off with rate cuts and then reversing its stance on concerns about widening current account deficit. Fears that the US Federal Reserve will start cutting its bond purchase programme sooner than expected only added to the worries. Foreign funds pulled out of the Indian equities and debt in hoards.
Pangs of inflation, driven mainly by rising prices of essential food items, added to the overall despondency in a year that saw the rupee dipping to its life time low level against the US dollar and the Current Account Deficit (CAD) soaring to historic highs.
The reports on Thursday came a day after the Federal Reserve gave the economy a vote of confidence by announcing that it would reduce its monthly $85 billion bond buying program by $10 billion starting in January.
Worries over the Fed's possible tapering had triggered massive capital outflows between May and September from emerging markets.
History has shown us that continued money printing over a period of time inevitably leads to high inflation and the destruction of the financial system. Hence, going slow on money printing "seems" like a sensible thing to do. But there are several twists in the tail.