US Fed: 50-50?<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
While the Fed may want to appear neutral, it just seems that everyone is unsure of what to do?
William Poole, St. Louis Federal Reserve Bank President
I am still very much in the 50-50 camp in terms of the probabilities for the August meeting, just as I was when I left the last meeting. We had the revisions of GDP data that came out Friday, employment data, other information, (which) probably lowers the outlook for economic growth going forward. On the other hand, the data that have come in relative to assessing inflation pressures have tended to tilt in the direction of greater pressures than we had previously thought. For example, downward revision to GDP indicates that almost certainly the productivity numbers will be revised downward as well. July 31, 2006
Janet Yellen, San Francisco Federal Reserve Bank President
The current spell of elevated core inflation should not set off alarm bells, though a numerical inflation target range might help build Fed credibility. July 31, 2006
Said we are coming close to the end of the road with interest rate hikes and it's just not possible to say exactly how this will play out. July 31, 2006
Frederic Mishkin, Federal Reserve Governor-designate
Monetary policy influences the economy and inflation with long lags, and consequently monetary policy must be made on the basis of forecasts. Such forecasts are always subject to considerable error. Consequently, policy 'undershooting' or 'overshooting' is always a possibility. July 31, 2006
Donald Kohn, Federal Reserve Vice-Chairman
"In the current episode, Federal Reserve communications have enabled investors to anticipate much of the rise in the funds rate that has occurred over the past two years and incorporate those expectations into prices in financial markets, speeding up the response of real activity and inflation relative to a situation in which policy actions are less well known." He notes: "Empirical estimates of the lag between a change in the funds rate and its full effect on aggregate output range from as short as one quarter to as long as a year and a half; the estimated response of inflation is also variable but tends to be somewhat more drawn out." July 31, 2006
Even the dollar may be on shaky ground?
The International Monetary Funds Annual Review of the US Economy
The real exchange rate appeared significantly overvalued, especially given the projected deterioration of <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />US net foreign liabilities. A staff assessment using macroeconomic fundamentals estimated the overvaluation in the 15-35% range. July 31, 2006
<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Oil: Worldwide Variables
The price of crude has been driven up by the tensions in the Middle East, as Israel and Hezbollah continue fighting and Syria prepares to get involved?
Haim Ramon, Israel Justice Minister
"Yesterday in Rome we have in effect obtained the authorization to continue our operations until Hezbollah is no longer present in southern Lebanon. The whole world knows that a Hezbollah victory will mean a victory for international terrorism, which will be a catastrophe for the world and for Israel." July 27, 2006
Mohammed Raad, Leader of Hezbollah's 14-member Parliamentary Bloc
"The position for the Lebanese government is to establish an immediate and complete ceasefire and to start indirect negotiations for a prisoner exchange. Anything other than that is not acceptable." July 27, 2006
Amir Peretz, Israel Defense Minister
"Israel will expand its offensive against Hezbollah in Lebanon. We are battling Hezbollah, which is nothing but the vanguard of the extremist regime in Tehran that finances and encourages its murderous activities." July 31, 2006
Bashar al-Assad, President of Syria
We are facing international circumstances and regional challenges that require caution, alert, readiness and preparedness. July 31, 2006
Unfortunately, oil price risks exist elsewhere?
Rafael Ramirez, Venezuelan Oil Minister
"Our policy is transparent. If the US wants to carry out hostile policies against us, we stop oil exports to this country. We can not steadily export oil to the US and be steadily subject to its hostility. Some actions should be taken against this situation." July 31, 2006
Edmund Daukoru, OPEC President
"There is no shortage in oil supply. The current geopolitical conditions are out of OPEC's hands." July 27, 2006
PBoC: Building Consensus
As the Central Bank sets the yuan parity at a record high, it appears that further flexibility for the Chinese currency could be in the cards.
Wen Jiabao, Premier of China
We must take effective measures to solve existing contradictions and problems to prevent the economy, which is already growing a bit too fast, from overheating. July 26, 2006
We should improve the formation mechanism of the CNY's exchange rate, in order to gradually increase the flexibility of the exchange rate. July 27, 2006
Charles Schumer and Lindsey Graham, US Senators
We gave him (Treasury Secretary Henry Paulson) a clear message that we have been very disappointed in the lack of progress China has made ... and if we didn't see progress between now and September 30 we would move on our legislation." When asked about support for their bill, they noted: "We've got 67 votes in our pocket. We would prefer not to have a vote but the Chinese government needs to understand if a vote is taken in September it will not be to their liking. We cannot allow someone as large as China to basically manipulate their currency and cheat the international marketplace." July 27, 2006
Yi Gang, Assistant PBoC Governor
We must have the determination to make the yuan a convertible currency. July 31, 2006
Li Yushi, Vice-President of the ChineseAcademy of International Trade and Economic Cooperation
I'm aware that people have different opinions, with some suggesting that the yuan should appreciate more quickly to help boost imports and balance trade. I believe the best choice is gradual appreciation. Some people say that China can afford another 10 percent to 15 percent revaluation, but I think that's just a theoretical assumption. July 27, 2006
BOJ: Mixed Signals
While those in the Central Bank remain hawkish, the government seems wary of the rhetoric?
Toshihiko Fukui, Bank of Japan Governor
"We have not said there won't be any rate hike by the end of this year." August 1, 2006
Miyako Suda, Bank of Japan Policy Board Member
"The timing and magnitude of future monetary policy changes will depend on economic and price conditions at the time and the BoJ does not have a target like a 'neutral rate,' nor does it have a specific scenario of when to achieve it at this point in time." July 26, 2006
"I think we need to adjust interest rates in a way that isn't behind the curve." July 26, 2006
Shinzo Abe, Japanese Chief Cabinet Secretary
We have not yet pulled out of deflation, but it is my understanding that it has come into sight. As to when to announce the end of deflation, we will keep a close eye on the situation and carefully study all data before making a comprehensive judgment. The decision will be made when it is certain that [the economy] will not fall back into deflation again." July 28, 2006
Kaoru Yosano, Japanese Economic and Fiscal Policy Minister
"The economy is gradually but definitely moving upward." July 28, 2006
However, some in the government believe the economy could be strong enough to weather a tax increase?
Sadakazu Tanigaki, Japanese Finance Minister
We should aim for a 10% tax before the mid-2010s (from the current 5%)?We have to see if we can raise the consumption tax in one shot or whether the economy is fine when we do so July 27, 2006
