Central bankers regain altitude while they can
Just as a fighter pilot who puts his plane into a steep dive to win a dogfight must gain altitude before attempting a new manoeuvre, central banks are trying to give themselves room to react in case another crisis emerges.
It can be difficult to separate the important from unimportant on any given day. Reflections mean to do exactly that – by thinking about what happened today, we can consider what might happen tomorrow.
An interest rate increase by the U.S. Federal Reserve has passed with barely a ripple of response in the public or media. A year ago, such a hike would have warranted volumes of analysis discussing the effect it might have on markets, the value of the dollar and other central banks' policies. After the announcement on June 14 of the quarter-point rise, the third over the past six months, all seems to be under control and running smoothly. In fact, a dispassionate observer might surmise that the financial crisis that began a decade ago has run its course, and that central bankers are losing their rock star status, only to return to their pre-2008 roles as low-key functionaries.
The largely unremarked-upon hike is a testament to how different the global economic climate of 2017 has been from the years before. The Volatility Index, published by the Chicago Board Options Exchange, is a measure of the perceptions of investors that is thought by some to
Chairman U.S. Fed Janet Yellen