The Federal Reserve deserves praise for managing once again to carry out a tricky transition without causing disruptions in financial markets and creating too much risk for the real economy. Sustaining this success will require more than just the central bank’s continued responsive policy making, Mohamed El-Erian writes for Bloomberg.
If you think Federal Reserve Chair Janet Yellen is stressed, spare a thought for Agus Martowardojo. On Tuesday, the governor of Indonesia’s central bank had to choose between cutting interest rates to support growth or hiking them to prop up his currency. He ultimately decided to split the difference and do nothing. Martowardojo’s dilemma is emblematic of the increasingly chaotic situation in the world’s emerging markets.
Congratulations to India for appointing Raghuram Rajan as the new governor of its central bank. It would be hard to think of anybody better qualified — not even Janet Yellen. But condolences to India for the news that monetary and financial policies aren’t the main obstacles to its prosperity. The economy needs better management, all right, but not at the Reserve Bank of India.