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Watching the Fed, and Remembering the Tequila Crisis
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International issues took on larger significance for the U.S. Federal Reserve in September 2015 as it looked at a small increase in interest rates. Schwartz points to the memories of the 1997 emerging market crisis and how fragile economies like Mexico were adversely impacted by rising rates in the U.S.. Mexico needed a large bank bailout and contagion spread to other countries. Kenneth Rogoff says the risks are real with declining commodity prices and falling currencies of emerging markets such as Brazil, Indonesia and Russia. Ripple effects would carry over to India and other countries. The sharp slowdown in the Chinese economy in the second half of 2015 was too recent for the Fed to take any sort of risk in September 2015.
The caution in raising rates of the U.S. Federal Reserve in 2015 and memories of the emerging market crisis in 1997
09/17/2015
In 1997 Federal Reserve rate increases worsened the situation in the fragile Mexican economy, with Mexico needing a large bank bailout. Contagion to other countries was also a large problem at the time. Harvard economists Kenneth Rogoff and Larry Summers, cite the situation facing emerging markets with the sharp fall in commodity prices and the decline in the value of the currencies, particularly Brazil, Indonesia and Russia, countries dependent on commodity exports, creating risks in the global economy that the Fed could not ignore. The debt crisis in China and slowing economy, with missteps by the government in handling the stock market decline, happened in August-September 2015, creating added uncertainty- making Sept 15, 2015, too soon for the Fed to risk even a modest 0.25% increase in rates.
Grouped Articles
Watching the Fed, and Remembering the Tequila Crisis
New York Times 09/18/2015
Fed Leaves Interest Rates Unchanged
New York Times 09/17/2015
Gloom on Brazil Finances Deepens
Wall Street Journal 12/17/2015
Why China’s Market Fell So Much
Wall Street Journal 01/05/2016
Why China’s Market Illness Has Gotten More Contagious
Wall Street Journal 01/12/2016
A January Pause, but Fed Affirms Plan for Gradual Rate Increases
New York Times 01/27/2016
Krugman on bubbles, the crisis in emerging markets in 1997 and in 2013
07/12/2010
He sees financial deregulation, cross-border financial flows, emerging market private debt in dollars and depreciating currencies, and the low interest rates of the U.S. Federal Reserve as the culprits for recurring bubles and financial crises.
Grouped Articles
New York Times 08/22/2013
How Emerging Markets Can Get Their Mojo Back
Wall Street Journal 09/12/2013
Wall Street Journal 11/04/2013
Seoul Forum Helps Heal IMF Wounds
Wall Street Journal 07/12/2010
‘Fragile Five’ Is the Latest Club of Emerging Nations in Turmoil
New York Times 01/28/2014
Emerging-Market Slide Tests How Much Nations Learned From Past
Wall Street Journal 01/30/2014
The U.S. Federal Reserve's policy difficulty in raising interest rates in 2015-2016
09/14/2015
The sharply slowing economy in China in September 2015 acts to put the Fed on another of a series of pause situations as it plans to raise rates. The Fed'd interest rate policy has shifted to raise rates vey gradually making the rate increases small and over an extended period of time, so that this does not affect the recovery. Very low inflation with the steep decline in commodity prices, especially oil, is making it easier for the Fed to make this pause.
Grouped Articles
Lesson for Fed: Higher Interest Rates Haven’t Been Sticking
Wall Street Journal 09/14/2015
Here’s a Way Yellen Can Raise Rates Without Spooking Markets
Wall Street Journal 09/14/2015
The Fed Gets a Last Data Point, and It Isn’t Good
Wall Street Journal 09/17/2015
Central Banks’ Lesson: Easy Money Alone Isn’t a Growth Salve
Wall Street Journal 09/18/2015
Watching the Fed, and Remembering the Tequila Crisis
New York Times 09/18/2015
Fed Leaves Interest Rates Unchanged
New York Times 09/17/2015
The U.S. automobile market and a Federal Reserve decision to raise interest rates in 2015
09/16/2015
Grouped Articles
Auto Market Reflects Fed’s Dilemma
Wall Street Journal 09/16/2015
Watching the Fed, and Remembering the Tequila Crisis
New York Times 09/18/2015
Martin Feldstein on U.S. Federal Reserve policy, quantitative easing and the need for an exit strategy to loose monetary policies
05/09/2013
Grouped Articles
Martin Feldstein: The Federal Reserve's Policy Dead End
Wall Street Journal 05/09/2013
Once Again, the Fed Shies Away From the Exit Door
Wall Street Journal 07/11/2013
Bhidé and Phelps: Central Banking Needs Rethinking
Wall Street Journal 07/16/2013
New York Times 12/08/2013
Citing Growth, Fed Again Cuts Monthly Bond Purchases
New York Times 01/29/2014
Lesson for Fed: Higher Interest Rates Haven’t Been Sticking
Wall Street Journal 09/14/2015
Keith Bradsher's NYT interview with Raghuram Rajan, Governor of the Reserve Bank of India, Jan. 14, 2015
01/15/2015
Rajan says he works well with prime minister Modi's economic policymaking team, including Arun Jaitley, the finance minister, and economic advisors to the Indian government. With the drop in oil prices there was pressure from the business sector and the small business support base of the new government for a reduction in interest rates. Rajan says he held off on reducing rates at the Dec. 2, 2014 meeting because it was not clear at the time whether the oil prices would remain low for an extended period. Since then inventory data and OPEC policymakers guidance show the prices are likely to remain low for an extended period. On Jan. 14, 2014, Rajan lowered rates by one quarter of a percentage point. In the Indian setup the Governor of the central bank makes decisions compared to the Federal Open Market Committee making decisions at the U.S. Federal Reserve.
Grouped Articles
Raghuram G. Rajan, India’s Central Banker, in Defense Mode
New York Times 01/15/2015
India’s Inflation Fight Pays Early Dividend
Wall Street Journal 01/16/2015
Monetary policy in India: The cycle turns
Economist 01/18/2015
Central Banks in India and Australia Take Steps to Lift Growth
New York Times 02/03/2015
Watching the Fed, and Remembering the Tequila Crisis
New York Times 09/18/2015
How New RBI Governor Patel’s Style Differs From Rajan’s
WSJ 10/05/2016
The risk of dollar denominated loans in Turkey, India, Brazil, S. Korea and other emerging markets as local currencies depreciate- 2013-2015
05/07/2012
As currencies in emerging markets, the real in Brazil, the rupee in India, the lira in Turkey depreciate in value, it becomes more difficult for borrowers in these countries to pay back loans denominated in dollars. During the period of quantitative easing policies of U.S. Federal Reserve chairman Bernanke following the financial crisis of 2008-2009, low U.S. interest rates and strong local currencies made it cheaper to borrow in dollar denominated loans than pay the higher interest for local currency loans in reals, rupees or lira.
Grouped Articles
Istanbul Skyline Reflects Cheap Dollars Now Growing Scarce
New York Times 08/20/2013
Mom-and-Pop Investors Bolt Emerging Markets
Wall Street Journal 08/22/2013
Rupee Throws Oil on India's Subsidy Problem
Wall Street Journal 08/21/2013
New York Times 08/22/2013
Emerging Stocks' Emerging Problems
Wall Street Journal 08/23/2013
Brazil Struggles With Weakening Currency
Wall Street Journal 08/23/2013
U.S. Federal Reserve policy on interest rates in September 2015 with the sharp slowdown in China
08/24/2015
Grouped Articles
No time for an interest rate hike - The Washington Post
Washington Post 08/24/2015
Lesson for Fed: Higher Interest Rates Haven’t Been Sticking
Wall Street Journal 09/14/2015
Here’s a Way Yellen Can Raise Rates Without Spooking Markets
Wall Street Journal 09/14/2015
Central Banks’ Lesson: Easy Money Alone Isn’t a Growth Salve
Wall Street Journal 09/18/2015
Fed Delays Interest-Rate Liftoff
Wall Street Journal 09/18/2015
Watching the Fed, and Remembering the Tequila Crisis
New York Times 09/18/2015
The U.S. Federal Reserve's Sept. 16-17, 2014 minutes and the shift in sentiment for raising rates with the stronger dollar and weak overseas economies likely to lower economic growth
10/08/2014
Grouped Articles
Fed Minutes Show Wariness Over Global Growth
Wall Street Journal 10/08/2014
New York Times 10/16/2014
Fed Likely to Remove ‘Patient’ Barrier for Rate Increase as Soon as June
Wall Street Journal 03/11/2015
Strong Dollar Stands in Manufacturing Sector’s Way
Wall Street Journal 03/16/2015
Dollar Will Keep Jabbing at the Fed
Wall Street Journal 03/25/2015
Central Banks’ Lesson: Easy Money Alone Isn’t a Growth Salve
Wall Street Journal 09/18/2015
The U.S. Federal Reserve's exit strategy from a loose monetary policy - 2011-2015
05/18/2011
Grouped Articles
Fed Officials Try to Set the Market at Ease
Wall Street Journal 06/24/2013
Wall Street Journal 07/11/2013
FX HORIZONS: The Fed’s Risky Codependency with Markets
Wall Street Journal 07/11/2013
Once Again, the Fed Shies Away From the Exit Door
Wall Street Journal 07/11/2013
Bhidé and Phelps: Central Banking Needs Rethinking
Wall Street Journal 07/16/2013
Bernanke Plays Down Link Between Jobless Rate, Fed Moves
Wall Street Journal 07/18/2013
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