The Taper and Its Shadow
North Atlantic central banks have vowed not to raise their short-term nominal interest rates until their economies show substantial recovery. The problem is that investors simply do not believe central bankers’ claim that their current desire to "taper" quantitative easing does not foreshadow the annulment of that promise.
BERKELEY – The central banks of the North Atlantic region have vowed not to raise their short-term nominal interest rates until the economies under their stewardship show substantial recovery. So far, that has not happened. On the contrary, these economies continue to be battered by the fiscal headwinds of austerity; by uncertainty over whether America’s Republican Party will, in fact, undermine the “full faith and credit” of the United States by allowing the federal government to default; by a broken housing-finance system; and by uncertainty about how the burdens of structural adjustment are to be allocated.
BERKELEY – The central banks of the North Atlantic region have vowed not to raise their short-term nominal interest rates until the economies under their stewardship show substantial recovery. So far, that has not happened. On the contrary, these economies continue to be battered by the fiscal headwinds of austerity; by uncertainty over whether America’s Republican Party will, in fact, undermine the “full faith and credit” of the United States by allowing the federal government to default; by a broken housing-finance system; and by uncertainty about how the burdens of structural adjustment are to be allocated.