The Credit Crisis: Final Act or Intermission?

[Based on a talk presented on April 29th to a meeting of UK-based CFOs – explaining the references to Britain and focus on Europe.] We have reached a particularly difficult stage in the development of the credit crisis. There are two quite different views of where we’re at. One is that the worst is now […]

Inflation in the Baltics: on its way down?

Each month Eurostat arranges a new round of the unofficial competition in “consumer price inflation” as it publishes a new round of inflation figures for the 27 EU countries. For a while the three Baltic countries have dominated in the top (or bottom as you like it!) with inflation rates substantially above the levels seen […]

The Future of the Dollar

Nowadays few things come up in economics discussions as often as the subject of dollar weakness, something that affects investors, exporters, importers and many other people that don’t even realize it. To analyze the issue, a bit of historical context is useful. The gold standard was the way in which the international monetary system maintained […]

Inflation Risk in Brazil and the Latest CB Decision

“Having assessed the macroeconomic outlook and the prospective inflation scenario, the Copom unanimously decided to raise the Selic interest rate to 11.75 percent p.a., without bias. The Committee understands that the decision to immediately materialize a relevant part of the basic interest rate move will contribute to a prompt retraction in inflation risk and, as […]

Central Bank Intervention and Inflation Targeting in Emerging Markets: Lessons from the Experience of Colombia

Policymakers in many emerging markets are attempting to resist currency appreciation by intervening actively in currency markets, typically through the accumulation of international reserves. At the same time, many of these same countries have adopted inflation-targeting regimes to anchor inflation expectations, most often using short-term interest rates as their main operating target. Thus, limiting currency […]

Is the Party Over in Argentina? The Market Internalizes the Political Effects of Inconsistent Macro Policies (or vice-versa?)

The last couple of days financial markets in Argentina have shown capital flowing away from government bonds and into buying dollars (hoarding them, “jus in case”). This might seem at first glance controversial with the apparently sound macroeconomic figures: fiscal surplus, current account surplus, high growth rate, low official inflation rates, etc. I will argue […]

The strong euro is taking its toll

With the euro having jumped above the mark of 1.60 $ for the first time in history, recent macroeconomic data shows that the strong currency is taking its toll on the continental European economy. The advance manufacturing PMI for the euro-area for April published today fell by 1.2 points to 50.8 points and thus is […]

Is the Corporate Sector EMU’s Achilles’ Heel?

The ECB reports in its April Monthly Bulletin (p.17): “The annual growth rate of MFI loans to non-financial corporations rose to 14.8% in February, up from 14.5% in the previous month. Overall, in the seven months from August 2007 to February 2008, total value of MFI loans to euro area non-financial corporations was €312 billion, […]

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