Writing on the wallCentral banks are getting nervous as the USD gets weaker and weaker. The USD index is the one single indicator that traders are focusing on when it comes to speculators buying and selling GOLD. The Feds hands are tied as they do not want to squash any economic rebound by increasing interest rates and they all know the economy is nowhere near recovery. GOLD traders hold all the cards as inflation and the USD run in opposite directions. The crises they mention below is the USD crumbling to worthlessness.
Weber Says Pre-emptive Rate Increases May Be Needed (Update1)
By Jana Randow
June 10 (Bloomberg) -- European Central Bank Governing Council member Axel Weber said central banks may have to raise interest rates before inflation risks materialize as a precaution to prevent future crises.
“A more symmetrical approach to monetary policy requires that risks emerging from increased money and credit growth and low risk premia are countered more decisively,” Weber, who heads Germany’s Bundesbank, said in a speech in Frankfurt today. “Raising interest rate levels as a precaution when it isn’t initially required with respect to medium-term price developments certainly is a challenge from a communication point of view, but one which has to be mastered.” The comments don’t refer to current ECB policy, a Bundesbank spokeswoman said.
The ECB last week predicted the economy of the 16 euro nations will shrink about 4.6 percent this year, with inflation expected to average just 0.3 percent. It kept its key interest rate at a record low of 1 percent. Weber, who has said he’s against the ECB lowering rates any further, argues a more symmetrical approach to monetary policy would help to smooth out the boom-and-bust cycle.
“The ups and downs of the financial cycle are not independent events,” he said today. “Therefore we have to be conscious of how we shape the risk perception and appetite of financial-market participants with our monetary policy.”
To contact the reporter on this story: Jana Randow in Frankfurt jrandow@bloomberg.net.