In an important change that's both needed and will be welcomed by many, Federal Reserve Chair Kevin Warsh just announced a shift in the FOMC meeting schedule to allow for deeper, strategic discussions. Next year, one of the eight traditional policy meetings will be dedicated to a more strategic discussion. That is likely to rise to two in the following year. #economy# #markets# #centralbanks# #federalreserve#

Quite a few of those now calling for rate hikes because inflation has exceeded target for over five years supported a series of rate cuts last year—when inflation had already been above target for four years. This isn't an argument against a policy response; inflation demands one. But there remains far too much focus on monetary policy and far too little on tools better suited to the task, including fiscal consolidation (an issue detailed in my September FT column). #economy# #markets# #inflation# #federalreserve# #centralbanks#

As widely expected, the Fed kept interest rates unchanged in a 10–2 vote. De facto avoiding forward guidance, the FOMC's statement noted that "the accumulation of more information will help the Conmittee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent target." Both dissenters favored a rate hike. Attention now shifts to Chair Warsh's press conference. #economy# #markets# #federalreserve# #centralbanks#

As the Fed's two-day meeting gets underway, here is market pricing via Bloomberg for rate hikes (chart). This includes a very low (~10%) probability of an October move and a high (~80%) probability of one priced in for December. #economy# #markets# #federalreserve# #centralbanks#

The Federal Reserve kicks off its two-day meeting today, with markets overwhelmingly expecting tomorrow's announcement to hold rates unchanged. We should expect a relatively hawkish tone in the remarks that follow, given the string of recent inflation data. Dissents on the decision are possible, though that's less clear. #FOMC# #FederalReserve# #economy# #markets# #centralbanks#

Via the @FT, my thoughts on why central bank rate hikes should not be “the only game in town” when it comes to addressing today's inflation challenge. The real remedies lie not with central banks but with governments: addressing supply bottlenecks and pursuing greater fiscal consolidation (which would also ease pressure on long-run yields by creating more room for the funding of innovations). #economy# #markets# #centralbanks# #inflation#

Good morning The signaling accompanying the Bank of Japan's rate hike sent the Yen weaker: In a widely expected move, Japan’s central bank raised interest rates by 25 basis points to their highest level since 1995. Yet, as the signaling regarding future hikes disappointed markets, the Yen depreciated more than 1%, continuing to unwind gains sparked by (actual and anticipated) FX intervention. (CNBC chart below). #economy# #markets# j #japan# #boj# #centralbanks#

The Bank of England is the exception this time around: In a 6–3 vote by its Monetary Policy Committee, the Bank held interest rates steady at 3.75%. With the Bank of Japan expected to hike tomorrow, and both the Federal Reserve and the European Central Bank having already raised rates, the BoE is alone among the major central banks in holding off this month. #economy# #markets# #centralbanks# #bankofengland#

Good morning. UK inflation climbed to 3.1% in August on higher energy prices, while core inflation remained unchanged at 2.6%. Matching consensus forecasts, the data leaves the Bank of England’s Monetary Policy Committee facing a delicate balance ahead of tomorrow's rate decision: push against against a headline rate back at 3% for the first time since March on worries that it may spill into core, or hold off because core is contained? (Markets are pricing in an 80% probability of a hold.) #economy# #markets# #centralbanks# @bankofengland