More central bank coordination to come
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Scott Jagow: Fed Chairman Ben Bernanke will give a speech in Frankfurt, Germany this morning. He’ll talk about coordination between the world’s central banks, something that could be a regular part of life. Here’s Jeremy Hobson.
Jeremy Hobson: Last month, central banks surprised the markets with a coordinated half-point interest rate cut.
Catherine Mann, a professor at the Brandeis International Business School, says that’s something we may see more of — with one caveat:
Catherine Mann: The different central banks do have different mandates. For example, we know the European central bank, their mandate is price stability. It is not about global GDP.
Mann says coordination is most likely when it comes to manipulating exchange rates. And least likely when it comes to regulating the financial markets.
Brad Setser at the Council on Foreign Relations sees some risk to coordination.
Brad Setser: Even if you have a global economy, different countries are going to be at different points in their own economic cycle at different points in time.
Setser says central banks are unlikely to wait for their counterparts to act, if their own needs demand immediate attention.
In New York, I’m Jeremy Hobson for Marketplace.
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