Fisher, president of the Dallas Central Reserve and a non-voting member of the Federal Reserve's rates committee, said it's only natural big players in the markets – the aforementioned 'feral hogs' - will try to sniff out weakness, but that the Fed will stick to its guns on the policy. Apparently, it’ll take a ‘significant spike’ in yields even to raise eyebrows at the US’ central bank.
He compared the Fed's position with the Bank of England in 1992, when hedge fund manager George Soros 'broke' the Bank of England by betting against Sterling.
But Fisher said the Fed needs to 'expect to be tested by a market reaction to check our willpower... [but] our job is to do what's right for the real economy. Our job is not to satisfy the rich'.
Germany’s Bank for International Settlements compounded things with a report yesterday which warned that quantitative easing should be handled with caution – and that governments should now focus on reducing their debts.
According to a report published by the organisation, QE has done nothing but create a ‘stock market love affair’, while economies still have yet to recover. Harsh words – but it does suggest that the US’ decision to ‘taper’ its money-printing activities has come at just the right time.
- Image: Flickr/BizJournalism