dove Posts on Forex Blog
UK Inflation at 3.3% YoY, BOE Governor King Dovish
Jun 17, 2008
In a surprise to many Forex traders, BOE Governor Mervyn King reacted dovishly to an inflation rate of 3.3%.
In his letter, required by the 3.3% inflation reading, King stated "If the bank rate were set to bring inflation back to target... the result would be unnecessary volatility in output and employment." King went on to state inflation will remain above target into 2009 and he expects to have to write several more letters.
In reply, Chancellor Alistair Darling, stated the rise in inflation has been "extremely moderate" compared with the 1970s and 1980s.
Clearly an imminent rate hike is unlikely.
At 7:30am est the GBPUSD has fallen sharply to 1.9477
Bank of England, BOE, inflation, dove
Fed Dove Mishkin Leaving in August
May 28, 2008
In a surprising move, Frederic "Ric" Mishkin turned in his resignation letter today. His last meeting will be August 5th, and he will formally finish service on August 31.
The resignation may be an important cue of future FOMC decisions. Mr. Mishkin was seen by many as a key ally to Chairman Bernanke, and a proponent of formal inflation targets. Mr. Mishkin took office Sept 2006, with his term set to expire in January 2014. That he leaves after serving only 2 years may be highly indicative of a change to the Fed's stance on inflation targets.
Mr. Mishkin's departure leaves the Fed with 3 empty slots on the 7 member board. President Bush has nominated 2 candidates to fill the open slots, but the Senate banking Committee, led by Chris Dodd (D - Conn) has not taken any action. The 4 remaining members will be:
Ben Bernanke (Chairman)
Donald Kohn (Vice Chairman)
Kevin Warsh
Randall Kroszner
Mr. Kroszner's term has expired, but he is allowed to remain until a new governor is sworn in.
All members of the Fed have been appointed by President Bush, so the Dems may be trying to hold out until next year with the hope of getting some of their "own" appointed. This can be evidenced by the Senate's reluctance to move on Larry Klane's nomination. He was nominated Nov 27, 2007 with little progress since. His experience as president of Capital One's financial services division likely would have been invaluable when markets got rocked from Decemeber - March. Incidentally, it was Chris Dodd who held up the late fix for the AMT, which slowed IRS refund checks for some 13 million Americans this spring. Chuck is not a big fan of Sen Chris Dodd.
Futures markets are now pricing in a 30% chance of a rate hike in September, vs 21% last week.
dove, Fed
