US’s Fed policy and Bank of England’s performance

In this interview with Nour Amache from Asharq Business Bloomberg, Christof Rühl, member of the Advisory Board of Crystol Energy and a Senior Fellow at the Center on Global Energy Policy at Columbia University, discussed the US’s Fed policy and some global macroeconomic prospects.

Christof said that this week is the week of Federal bank meetings around the world, where financial markets factored in these meetings. The meeting outcomes are expected to still go in the same direction where stimulus will be gradually withdrawn from the markets. Derailing from this trend will create panic in the markets thus leading the Fed to revise its strategy. The Fed is also sending a clear message i.e. unemployment figures and tensions with China are still minor and will not impact the plan to reduce stimulus.

Jerome Powell, Chair of the US Fed, has proven himself to adapt between two different presidents in addition to exhibiting good traits of transparency and a degree of independence. The biggest challenge he is now facing is to control spending and keep up with the Fed strategy. President Biden would be wrong to replace him especially that it will not affect him in future presidential elections.

Commenting on the performance of the Bank of England, Christof said that the bank did an overall better job than that of the US. Furthermore, Boris Johnson’s government said that it will raise taxes, whereas in the US, government spending is still on its way.

In short, markets are still volatile so we must expect some corrections to happen along the way. Not to forget how the market will factor in the recent developments in China, which remains to be seen.