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In Our Chief Economist

Interest rates and exchange rates

THERE IS NO ONE-TO-ONE correspondence between the rate of interest and the exchange rate. Still, more often than not the rate of interest is the only variable that can control the exchange rate. Thus, it is possible to defend the currency, both under a peg and under the float, up to a certain threshold beyond...

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In Our Chief Economist

America: are times a-changing?

A HUGE PACKAGE and massive growth in money supply, along with near-zero interest rates, might do the trick. And it may raise inflation indeed. Although inflation is far from being a concern globally, it is potentially important for the following two reasons: First, monetary history tells us relaxing price stability targets and/or constraints results in...

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In Our Chief Economist

Low quality and below par growth

WE HAVE BEEN WAITING FOR Godot for a entire decade, if not two or more. On the face of it there is a strong and fluid dynamic that drives the business world. Here and there old town folk who were busy trading olives now produce olive oil machines, for instance. More people export, even SMEs....

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In Our Chief Economist

Bringing back economic serenity

Finally, the Central Bank has come to the rescue. True, there is a shortage of funds to rekindle investments. Again, it is no secret that net reserves are about minus USD 45bn. Also, it would take more than one step to convince households – let alone high net worth individuals, who would obviously behave defensively...