Nick Goodway: Floundering world waits for Janet Yellen to throw it a line

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If, like me, you wonder why the world’s central bankers will be massing at a small town between the Teton and Gros Ventre mountain ranges in Wyoming at the end of this week, there is apparently a good reason. 

When the Federal Reserve Bank of Kansas held its first annual economic policy symposium in 1982 it wanted to attract the attendance of then-US Fed chairman Paul Volcker. 

What better to way to lure the keen fly fisherman than to hold the meeting at Jackson Hole, which boasts “world-class fishing for native cut-throat trout?” 

I have no idea whether the current Fed chairman Janet Yellen has piscatorial inclinations, but it will be her words this coming Friday which will be the bait for economists and market traders across the world. 

She didn’t turn up to the symposium last year so this year’s attendance will be even more closely watched. 

The catchy title of the meeting is “Designing resilient monetary policy frameworks for the future.” One for pointy-headed wonks if ever there was one.

The meat of the meeting will be twofold.

First, the likelihood of the Fed raising interest rates by the end of the year. Back in January people were talking about possibly four rises in US rates this year. 

Now it is down to will it move in December or wait until early 2017? In a world of lower and longer rates and quantitative easing on a massive scale what the world’s largest economy does matters to everyone. 

Second, Brexit. This is the first meeting of central bankers since the UK voted to leave the EU. 

Mark Carney is not going but his deputy Minouche Shafik is. We should wish her good fishing in the land of cut-throat trouts.

Woodford’s plan may not pay off

Neil Woodford has always been good at grabbing headlines in the world of fund management. Now he’s doing it again with the decision to end bonuses at his firm Woodford Investment Management. 

Or, to be fair, with the 35-strong staff’s decision to move from variable compensation to fixed salaries starting this year. 

It is an admirable move but one which is unlikely to be followed by much of the industry. 

It also throws up a couple of potential problems. 

If the firm has a bad year it cannot reduce costs by slashing bonuses. 

And if one manager within the firm does spectacularly better than colleagues, what’s to stop them being poached by one of those nasty rivals still offering a guaranteed bonus?

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August 22, 2016 |
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