Pity the plight of the central banker. The halcyon days of inflation targeting recede ever farther into the past, along with the glorious simplicity of agonizing whether 25 bp is enough. Instead, the fate of the world seems to hang in the balance, even while the Fed Funds rate remains stuck at zero.
All over the world, central banks are stepping in to catch the falling knife dropped by their ostensible political masters, the issuers of sovereign debt. Most notably, the ECB has extended its bond-buying to Spain and Italy, and the Fed has guaranteed another two years of ZIRP. Read more