monetary policy

Inflation in China increased in May to reach a 34-month high of 5.5 percent which spurs the government to tighten its monetary policy as the economic growth is slowing down. It is now a top priority for Beijing to taken control of the inflation.

The conclusion of the economist who analyzed Tuesday data says the world's second-biggest economy is slowing down, but not too quickly.

Lowering the value of the US dollar is not what the US Federal Reserve is pursuing in its ultra-easy monetary policy according to the statement made by the Federal Reserve Bank President Sandra Pianalto.

"We don't target or try to manipulate the value of our currency; we focus on our two objectives of price stability and maximum employment," she said in response to audience questions at an Oberlin College event.
 

The euro declined versus major currencies in early European deals on Monday as markets are concerned by the health of European sovereign debt and worries about the possibility of further Chinese monetary policy tightening.

The euro weakened against the dollar in early European deals on Monday. The euro-dollar pair is now worth 1.3640, down from Friday's close of 1.3694. If the euro drops further, it may likely target the 1.357 level.

During the upcoming event at Gyeongju, South Korea, the Group of 20 leaders will be considering the issue of a global "currency war," being pressed to come to a consensus as soon as possible. The truce in the currency war is needed to calm down foreign-exchange markets, still any certain decisions will be left to the leaders of the big industrial and developing countries, who meet in Seoul next month.

According to Ben Bernanke, who claims US economic forecast to be “unusually uncertain", the Federal Reserve stands ready to ease monetary policy further if the budding US economic recovery wanes.  

 In an interview given to the Financial Times the top executive at the Federal Reserve stated that the central bank could remove part of its huge support to the US economy once the recovery becomes solid and monthly employment rates increase.

St. Louis Federal Reserve Bank President James Bullard said that he would not approve tightening the monetary policy unless the recovery achieves its stable stage.

 In the transcripts of a speech to be carried at the Israeli Presidential Conference European Central Bank Governing Council member Axel Weber stated that the euro zone will unlikely experience the second recession after exiting it. He noted that there are no risks of price instability in the policy-relevant medium-term horizon.

In a weekly column for Forbes Brian S. Wesbury, a chief economist and Robert Stein, a senior economist at First Trust Advisors in Wheaton, Ill. shared their view of the current status of the US economic recovery and their attitude towards widespread forecasts and outlooks.