New Weekly Report: Central Bank Speak from Around the World

Published July 4th, 2006 - 02:51 GMT

FedSpeak: The Big Decision

What they said before the hike that sparked rumors of 50 basis points and continuous rate tightening?

The Hawks

 Ben Bernanke, Fed Chairman

The current productivity revival still has some legs, as the full economic benefits of recent technological changes have not yet been completely realized. June 9, 2006

"The cumulative increases in energy and commodity prices have been large enough that they could account for some of the recent pickup in core inflation. As yet, these expectations measures have remained within the ranges in which they have fluctuated in recent years and inflation compensation implied by yields on government debt has fallen back somewhat in the past month. Nevertheless, these developments bear watching." June 19, 2006

 William Poole, St. Louis Fed President

"If the inflation rate continues to be persistent like this, the Federal Reserve will simply have to pursue persistent policies that will keep that inflation from increasing further." -- June 16, 2006

The Moderates

 Donald Kohn, Fed Governor

"Inflation expectations have come a little bit unhinged -- it's not a lot, it's not a big deal, but it has presented us with some issues. When it comes to straitjackets and slavish adherence to rules, I'm foursquare against both of those things." June 19, 2006

 Randall Kroszner, Fed Governor

"If you look at the broader mosaic (of inflation measures), a number of these measures have been moving up to levels that I am less comfortable with." June 16, 2006

"We want to try to look at where inflation is going. We don't want to look in the rear-view mirror at what has happened to inflation." June 19, 2006

ECBSpeak: To hike or not to hike?

Hawkish members

 Jean-Claude Trichet, ECB President

You shouldn't make overly mechanistic conclusions about rate hikes. Until now rate moves have been regular, but the ECB is not going to tie itself down in advance." June 26, 2006

 Axel Weber, ECB council member

"Short term nominal interest rates continue to be low and real rates are still close to zero. That is why it is appropriate to continue withdrawing monetary stimulus if our base scenario for growth and inflation are confirmed." June 23, 2006

 Erkki Liikanen, ECB council member

"Risks to the inflation are on the upside and one has to follow closely developments. Historically, interest rates are still low, even in the light of the European Union's history. Trust has to be kept up so, that the highest rates of crises years will never be seen again." June 22, 2006

 Yves Mersch, ECB council member

 We've never said that we can only act every three months and by 25 basis points?[There are] several indications which point to increased upward risks to price stability. June 26, 2006

Typical doves are even sounding moderate to hawkish?

 Lorenzo Bini Smaghi, ECB executive board member

"In the next few months, monetary policy will continue to follow the same strategy of adapting interest rates in relation to inflationary pressures and the pace of growth." -- June 15, 2006

 Guy Quaden, ECB council member

"We don't have taboos. We will continue to discuss month after month the incoming data. If needed we are able to act independently of logistical considerations and constraints. There is no reason to exclude on principle a decision by teleconference." June 26, 2006

BoJ: An imminent end to ZIRP?

The Hawks

 Kaoru Yosano, Japanese Economic and Fiscal Policy Minister

At the level (of short-term rates) like this, it's like the BoJ is flying under only one wing. The interest rate level that has no room to be lowered is ridding (the BoJ) of monetary policy options completely. May 30, 2006

What I'm concerned about is that while we are debating whether deflation is over, the condition could become inflationary, and we must avoid that. June 13, 2006

 Kiyohiko Nishimura, Bank of Japan policy board member

"We will judge monetary policy every time we receive economic data. We need to analyze the impact of the zero-interest rate policy from the long-term view." He adds that the bank will adjust rates slowly and cautiously. June 21, 2006

"?if price rises are small but positive, keeping nominal rates excessively low for long risks causing considerable problems in the long run, even if the possibility of such problems materializing is small." June 21, 2006

"We have no presumptions. On the near-term outlook for the Japanese economy, I don't see any problems in maintaining the scenario of expansion for now, but we have to keep in mind that those (risk) factors could emerge." June 22, 2006

The Doves

 Heizo Takenaka, Japanese Minister of Internal Affairs and Communications

"When everyone said the Japanese economy was bad three or four years ago, I wasnt that pessimistic, but now, when people say the economy is getting better, I don't really feel optimistic." June 16, 2006

 Sadakazu Tanigaki, Japanese Minister of Finance

"Japan's economy will be negatively affected if interest rates rise one-sidedly while the country has yet to eliminate deflation." June 21, 2006

 Shinzo Abe, Japan Chief Cabinet Secretary

"Monetary policy is up to the Bank of Japan, but the BOJ needs to continue working as one with the government to ensure that the economy has emerged from and will not go back into deflation. The BOJ needs to continue zero interest rates for the time being to support the economy." July 3, 2006

BoJ:Fukui Debacle

Toshihiko Fukui, Governor Bank of Japan

"There is severe criticism that I had sought to make money and that's a due criticism. If a fund chases only returns, it may turn out to be a greenmailer. I am an amateur, so that's not something that I can judge. Let me accomplish my duties and do my best to pursue financial policies from now on." June 22, 2006

Supporters of the Governor

Sadakazu Tanigaki, Japanese Finance Minister

Defended Fukui, saying that the investment in question did not infringe upon internal BOJ regulations.  Tanigaki also said that the government wants the Bank of Japan to take steps to restore public confidence in it. June 22, 2006

Kaoru Yosano, Japanese Economics Minister

Said that a Fukui resignation would send the "wrong message" to global financial markets. June 24, 2006

Junichiro Koizumi, Japanese Prime Minister

When asked whether there was any change in his view that Fukui should not resign, given public opinion polls suggesting that he should, he replied, There is no change. June 28, 2006


Not everyone is so kind?

Editorial, The Asahi Shimbun

Fukui?provided money for the now infamous fund because he admired Murakami's challenger spirit, according to his own account. No matter what motivated his investment, Fukui should have refrained from any act that could be regarded as a simple pursuit of profit?After hearing what he said, we cannot help thinking he didn't take the issue of professional discipline very seriously. June 22, 2006

Ichiro Ozawa, leader of the Democratic Party of Japan

"He (Toshihiko Fukui) should realize his responsibility and step down in order to regain the public and internal confidence in the Bank of Japan." June 26, 2006

Oil: Truly a global issue

Shokri Ghanem, chairman of Libya's National Oil Corp.

To tell you the truth, I won't be surprised to see prices go even higher. There are so many factors like geopolitics and speculation, so there is no reason why prices won't go up. June 1, 2006

Kazem Vaziri-Hamaneh, Iran Oil Minister

"We need oil exports because currency that comes from them should be used to build infrastructure. However, if we feel we have to, we will defend our rights." June 8, 2006

Richard Fisher, Dallas Fed President

"Everyone is concerned about the possibility of the passing through of gas and oil energy pressures. June 13, 2006

Abdullah Al Attiyah, Qatar Oil Minister

"A fair market price should be in the range of $50-55 a barrel. It's a reasonable price, but we never control prices, they are market driven. ... The barrel lost $5 in a few days due to geopolitics, and it's no longer related to demand and supply." June 16, 2006

"There is no shortage of oil at the moment. If the price remains the way it is now, we will roll it over like we did at our last meeting. From here to September 11 when we meet in Vienna, I cannot predict what will happen, but from where I see it now, we will roll it over." June 22, 2006

John Browne, British Petroleum's CEO

Regards $60 oil as unsustainably high, and has said $40 may prove to be a floor price for the commodity. June 26, 2006

BoE: Steady as she goes

With the passing of the BoEs lone hawk, David Walton, commentary on future rate hikes have been vague at best?

 Mervyn King, Bank of England Governor

At the Bank of England, our approach is to keep it simple. We don't say where interest rates will go next for the simple reason that we don't know. And it would be quite misleading to pretend otherwise. The MPC reaches a new judgment each month. June 21, 2006


"Knowledge of our objective and our analysis is all that markets need from us to form judgments about the future path of interest rates. Changes in our analysis, and the range of views within the Committee, may well affect the conclusions that financial markets draw about the likely path of interest rates." June 22, 2006

 Gordon Brown, Chancellor of the Exchequer

"What I said when I made the Bank of England independent (in 1997) remains even more true today, I said that our new monetary and fiscal regime was founded on stability first, foremost and always, stability yesterday, today and tomorrow." June 22, 2006

Dovish as usual?

 Kate Barker, BoE MPC Member

We have seen these big rises in energy prices, and that has put a squeeze on what people have to spend. But we haven't seen that translate into inflationary pressure in the labor market. May 31, 2006

The last two years have seen a number of significant inflation pressures from energy and commodity prices. It seems unlikely that these will continue to rise at so strong a pace, although the strength of the world economy suggests there may be some upside risks. June 22, 2006

PBoC: Government support for appreciation?

Yu Yongding, PBoC MPC member

"China should adopt more monetary tightening policies and may allow faster appreciation of its currency." June 23, 2006

"Yuan will have an obvious uptrend next year, and it will probably appreciate..." June 26, 2006

Zhou Xiaochuan, PBoC Governor

"Second quarter growth will probably be quite high, more than 10%. We have to try and keep growth stable and sustainable, not deliberately repress the potential of economic growth. China is still a developing country. We are trying to strike a balance between economic growth and stability." June 25, 2006

On flexibility, it's not not enough, but we're gradually increasing flexibility?Demand and supply relation is playing a greater and greater role. June 25, 2006

Bo Xilai, Chinese Commerce Minister

"Since the revaluation, the yuan has moved both upwards and downwards on market forces and has gained more than 3% even on the back of a strong US dollar. These facts prove that the Chinese government is not manipulating the exchange rate and that more requests for China to further appreciate the yuan are groundless." May 31, 2006

Wu Xiaoling, PBoC Deputy Governor

The government is working to move toward a freely traded currency. March 18, 2006

Internationally speaking, the situation of over-reliance on a certain country's currency for international trade, settlements and reserve assets should be gradually changed." June 27, 2006


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