jueves, 3 de julio de 2014

Bubbles? Not the preserve of monetary policy says the Fed...

Federal Reserve (Fed) Chairperson Yellen reiterated her view on expansive fiscal policies and asset bubbles in a speech at the International Monetary Fund on July 2. Dr. Yellen accepts that maintaining financial stability is a primary responsibility of the Fed but argued that is best done through macro-prudential regulation. Acknowledging the challenges to regulating successfully that the substantial shadow banking sector poses, she made it clear, however, that she hasn’t eliminated monetary policy as a tool to rein in financial excesses.

Not all policymakers are as sanguine that low interest rates and expansive monetary policy don’t pose a threat to financial stability. Perhaps the perception of a threat depends on whether the size of the economy relative to the size of capital flows… As RaboBank put it, although the “approach is arguably an improvement on the Greenspan/Bernanke-era “Let Them Eat Bubbles” policy stance, it still does not seem to address the issue that in today’s global, interconnected markets central banks will presumably have to be regulating left, right, and centre to try to prevent bubbles from forming somewhere”. 

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