Monetary News Jan. 3 - 7

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News
FRIDAY
Ryan Will Push to Limit Fed Oversight to Inflation Only
A top Republican on Thursday said he will push for legislation paring back the Federal Reserve's mandate to focus solely on controlling inflation, not ensuring full employment.
Busch: Fed to Stay Course, Markets to Correct Course
On February 7th, Bernanke will address the National Press Club. It will be the first time since the financial crisis two years ago that he’s taken questions from the press. This will provide another opportunity for the Chairman to explain the central bank’s position directly to the voters and face questions over monetary policy.
China Will Back Europe, Euro With Currency Reserves, Official Yi Pledges
Europe and the euro will remain among the most important areas of investment for China’s world-record $2.65 trillion of foreign-exchange reserves, a central bank official said in the nation’s latest show of support.
Bernanke urges Congress to adopt sweeping deficit plan
Federal Reserve Chairman Ben S. Bernanke on Friday urged Congress to act to bring down trillion-dollar deficits that he warned threaten the nation's economic future. He said that sweeping plans offered last month by President Obama's deficit commission and other bipartisan groups offered "useful starting points for a much-needed national conversation about our medium- and long-term fiscal situation."

WEDNESDAY
Economic Recovery Not Strong Enough to Alter Stimulus: Fed
Federal Reserve officials stuck with the pace of their $600 billion Treasury bond-buying program last month because the economy wasn't improving fast enough to make a noticeable dent in unemployment, minutes of the December meeting show.
World Bank issues its 1st yuan bonds in Hong Kong
The World Bank said buyers of its 500 million yuan ($76 million), two-year bond were mainly Hong Kong-based financial institutions, companies and wealthy individuals. It said the money will go into its general fund, rather than being raised for a specific purpose.
Fed members split over economic outlook
Policymakers at the Federal Reserve were divided in their outlooks for the economy, suggesting that the central bank is unlikely to change direction any time soon.

TUESDAY
Biggest Financial Decision in 2011 Is European:
What’s the biggest financial decision facing Europe in 2011? Easy. The choice of a new president at the European Central Bank.

MONDAY
US dollar seen rising in 2011 after rough 2010
Never mind the lackluster economy, the huge trade deficit or the government's piles of debt: The U.S. dollar is still expected to outperform most of the world's major currencies next year.
China again hikes interest rate in inflation fight
The People's Bank of China said on its website that it is raising the benchmark interest rate by a quarter of a percentage point beginning Sunday. The move increased the one-year lending rate to 5.81% and one-year deposit rate to 2.75%.

Economist Comments
FRIDAY
Fed Holds the Reins Over the Stock Market, Economy
While many economists say the stock market is a discounting mechanism that leads the economy, both the market and the economy are actually mechanisms that respond to changes in macro liquidity.
Is the Fed to Blame for Soaring Global Oil Prices?
The current spike in oil futures, say Birol and Jakob, is a product of excess supply — of speculative dollars, billions of which are flowing into U.S. commodities markets.

THURSDAY
Is the Market Ready for a 10% Rally in the Dollar?
And if, at a minimum, a 10% rally in the dollar played out, would that translate into a long overdue 10% correction in the indices?

WEDNESDAY
Do Inflation Expectations Drive Consumption?
After proponents of the Federal Reserve’s second round of quantitative easing (QE2) abandoned the argument that QE2 would spur growth by bringing down interest rates, the new defense became “we intended for rates to go up all along, as a result of increased inflation expectations.”

TUESDAY
Five Things You Need to Know: Inflation vs. Deflation... Still
That there still exists an ongoing debate about inflation or deflation pains me. Clearly, I have failed you.

Blogs
THURSDAY
Why is the euro so expensive?
Last year, the euro was just about the worst-performing of the thirty-odd “major” currencies tracked by Bloomberg. So why isn’t the euro much cheaper? Perhaps foreign exchange market believe that the worst of the euro-zone crisis is over, that the troubles can be contained, or that Europe will somehow muddle through as it did last year.

WEDNESDAY
Show me (the effect of) the money
It is clear that QE has had a much greater impact on the monetary base (doubling it in the autumn of 2008) than on other measures such as credit growth.

TUESDAY
U.K. Think Tank Sees 20% Chance Of Euro’s Survival
Europe’s common currency, battered for more than a year by a sovereign debt crisis, is unlikely to survive the next decade in its current form, the Center for Economics and Business Research warned Friday.

MONDAY
Was the Euro doomed from the start?
In a recent interview I was asked, 'will the Euro survive?'  I responded, 'I hope not.'
Estonia embraces euros
On Jan. 1, 2011, Estonia becomes the 17th euro country. What does this mean for the former Soviet republic – and for the euro?

Reports
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