FX MONETARY POLICY
contacts. During his career, he wanted desperately to be the Fed Chairman. However, today he may not want to come out of retirement, especially for ‘this’ position. The job now is materially different than in the past, due to rates being stuck at the zero lower bound for the fifth year
in a row. Furthermore, the
job would begin during the peak in risks of the greatest monetary policy experiment in modern finance. Lastly, superstar - yet mortal - Don Kohn is 70 years old.
Whoever the chair plenty of challenges ahead
moving to Washington to serve as a Fed governor, and again from 1999 to 2004 before becoming president of the San Francisco Fed. By the way her record for consensus isn’t perfect. She is highly regarded by many central bank staff members, who call her an effective leader with a sharp mind. But she has clashed with others and left some hard feelings in the wake of those confrontations, according to interviews with more than a dozen current and former staff members and officials who worked with her directly in recent years. We could say that compared with the current chairman, Janet Yellen brings a
demanding and harder-driving
leadership style to the central bank, in contrast to Mr. Bernanke’s low- key and often understated approach.
But the real reason which could stop her candidacy has not to do with
personality issues. Obama’s ideology stands quite opposed to Donald Kohn
Don Kohn would be an ideal candidate
and great compromise.
He spent his entire 40 year career in the Federal Reserve System. He was well liked by Fed colleagues, politicians, and financial market
46 FX TRADER MAGAZINE October - December 2013
what current Fed policy represents. QE lifts prices of risk assets, making rich people
richer; after all, the
wealthiest people own the vast majority of risk assets. At the same time, ZIRP (Zero Interest Rate Policy) acts as a wealth transfer from the poor to the rich. The president is outspoken about the growing wealth divide and income inequalities. The last thing he wants to do is further exacerbate them and fuel benefits to the “millionaires, billionaires, fat cats, and jet-setters” but maybe after Summers failure he is left with no other solution than tolerate a Fed very similar to the current one.
While we are waiting for a name, which may already be disclosed by the time you read this article, I think it is to be more interesting to concentrate on the many challenges lying ahead for the most important central bank in the world.
TRANSPARENCY VS CONFUSION
In the last few years the Fed has been trying to move towards more transparency. Te main change has been to extend the provided
aſter FOMC.
information Starting
April 2011 every other FOMC (basically on a quarterly basis since usual yearly calendar schedules 8 FOMC) brings not only a one-page communiqué (usually parsed word by word from markets) followed 3 weeks later by full minutes but a full menu: communiqué, SEP (Summary of Economic Projections) from all members of FOMC and a complete
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