Federal Reserve vs European Central Bank

Each year central bankers from around the world meet in the US resort of Jackson Hole, Wyoming to discuss the state of the global economy. One of the main points of discussion is whether they should start to print more money to encourage growth.

The figures coming out of the US suggest that growth has been slower than expected and Ben Bernanke (Fed Chairman) is set to continue buying US Treasuries to increase liquidity in the market. By contrast his European counterpart, Jean-Claude Trichet, faces a situation where he may gradually remove the stimulus from the European economy as the euro-area economy was surpassing growth forecasts. Therefore there is likely to be discussion of different strategies for their economies. Furthermore, Trichet’s optimisim and Bernanke’s caution might see the euro strengthen against the dollar

The UK and Japan are likely to talk about how they might have to push more money into their economies to stimulate growth, a last resort when benchmark interest rates approach zero. Click here for an interesting article from ‘The Times’.

From the left: Jean-Claude Trichet (ECB President), Ben Bernanke (Federal Reserve Governor), Mervyn King (Governor of the Bank of England)

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