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.

Financial Nigeria Magazine - - Contents -

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

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