TEXT OF INTERVEW
JEREMY HOBSON: Now let’s get the two big events in Washington this week. Obviously President Obama will be delivering the State of the Union address tomorrow night. But also, the Fed begins a two day meeting tomorrow.
And that’s the one Paul Dales will be paying more attention to. He’s an economist at Capital Economics and he joins us from Toronto. Good morning.
PAUL DALES: Good morning.
HOBSON: So what is it that really has you interested in what the Fed’s going to be doing?
DALES: The interest really whether the signs of better economy environment prompt the Fed to alter it’s policy. And buy fewer treasury securities that it has pledge to do, which would therefore remove some support from the economy, but I don;t think that’s going to happen. I think it’s too soon. The economic recovery is looking a bit better, but the Fed really needs to see more for it to withdraw its policy stimulus.
HOBSON: And the policy stimulus you’re talking about the $600 billion plan to buy up government bonds and really throw some more cash into the economy. How much do you think that that matters outside of the United States? Do you think world leaders are going to be watching to see what the Fed does?
DALES: I think there will be, yes. There was quite a bit of an uproar when the Fed started this policy because it seemed to be pushing down the dollar, which therefore pushes up the exchange rate of other nations. So there is some concern there, and further issues about this might prompt some governments to take measures to maybe reduce their own exchange rate, which obviously has implications around the world for every nation.
HOBSON: Alright, Paul Dales, economist at Capital Economics. Thanks so much.
DALES: My pleasure.
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