Who Should Have the Final Say Over Central Banks?
The 2008 financial crisis and its aftermath vaulted central bankers from obscure technocrats to leading actors in the global economy.
Institutions that had been known for a behind-the-scenes role mostly tweaking interest rates took on the mantle of Marvel-style first responders. Policymakers such as Federal Reserve Chair Ben Bernanke and European Central Bank President Mario Draghi became household names, popping up on primetime television slots or taking center stage at major conferences. Mark Carney, former head of both the Bank of Canada and the Bank of England has launched a bid to replace Justin Trudeau as head of the Liberal Party of Canada. The current Bank of England governor, Andrew Bailey, has even taken to TikTok to explain policy.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
an hour ago
- Yahoo
Volatility Vanishes Across Markets as Traders Brace for Powell's Jackson Hole Speech
A pervasive calm has taken hold of asset classes as traders look forward to Federal Reserve (Fed) Chairman Jerome Powell's speech at the annual Jackson Hole Symposium, scheduled for Aug. 21-23. Bitcoin's (BTC) 30-day implied volatility, as measured by Volmex's BVIV and Deribit's DVOL index, has declined sharply in recent months, hovering near two-year lows of around 36% last week, according to TradingView data. Similarly, the CME Gold Volatility Index (GVZ), which estimates the expected 30-day volatility of returns for the SPDR Gold Shares ETF (GLD), has more than halved over the past four months, dropping to 15.22%—its lowest level since January. The MOVE index, which tracks the 30-day implied volatility of Treasury notes, has also declined in recent months, reaching a 3.5-year low of 76%. Meanwhile, the VIX, widely regarded as Wall Street's "fear gauge," fell below 14% last week, down substantially from its early April highs near 45%. A similar vol compression is seen in FX majors such as the EUR/USD. Rates are 'still high' The pronounced slide in volatility across major assets comes as central banks, particularly the Fed, are expected to deliver rate cuts from restrictive territory, rather than amid a crisis. "Most major economies are not easing from ultra-low or emergency levels like we saw after the financial crisis or during COVID. They're cutting from restrictive territory, meaning rates are still high enough to slow growth, and in many cases, real rates, adjusted for inflation, are still positive. That's a big shift from the last easing cycles, and it changes how the next phase plays out," pseudonymous observer Endgame Macro noted on X, explaining the bull run in all assets, including cryptocurrencies and stock markets. According to the CME's FedWatch tool, the Fed is expected to cut rates by 25 basis points in September, resuming the easing cycle after an eight-month pause. Investment banking giant JPMorgan expects the benchmark borrowing cost to drop to 3.25%-3.5% by the end of the first quarter of 2026, a 100-basis-point decrease from the current 4.25%. Per some observers, Powell could lay the groundwork for fresh easing during this Jackson Hole speech. "The path to rate cuts may be uneven, as we have seen over the last two years, where markets have been eager for rate cuts and sometimes disappointed that the Fed has not delivered them. But we believe the direction of travel for rates is likely to remain lower," Angelo Kourkafas, a senior global investment strategist at Edward Jones, said in a blog post on Friday. "With inflation treading water and labour-market strains becoming more pronounced, the balance of risks may soon tip toward action. Chair Powell's upcoming remarks at Jackson Hole could validate the now-high expectations that, after a seven-month pause, rate cuts will resume in September," Jones added. In other words, the decline in volatility across asset classes likely reflects expectations for easy monetary policy and economic stability. Markets too complacent? However, contrarians may view it as a sign that markets are too complacent, as President Donald Trump's trade tariffs threaten to weigh on economic growth, and the latest data points to sticky inflation. Just take a look at the price levels for most assets, including BTC and gold: They are all at record highs. Prosper Trading Academy's Scott Bauer argued last week during an interview with Schwab Network that volatility is too low following the recent round of economic data, with more uncertainty on the horizon. The argument for market complacency gains credence when viewed against the backdrop of bond markets, where corporate bond spreads hit their lowest since 2007. That prompted analysts at Goldman Sachs to warn clients against complacency and take hedges. 'There are enough sources of downside risks to warrant keeping some hedges on in portfolios,' Goldman strategists led by Lotfi Karoui wrote in a note dated July 31, according to Bloomberg. 'Growth could surprise further to the downside,' dis-inflationary pressures could fade or renewed concerns over Fed independence may fuel a sharp selloff in long-dated yields. In any case, volatility is mean-reverting, meaning periods of low volatility typically set the stage for a return to more turbulent conditions.
Yahoo
3 hours ago
- Yahoo
'The risk that's on our doorstep': July inflation data has economists on edge
Markets ended the week largely unfazed by a hotter wholesale inflation print and signs of firming consumer prices, but some economists warn the underlying story is more concerning than investors seem to believe. The Producer Price Index (PPI) for July surged to a three-year high, with services inflation playing a key role in the gains. A similar trend appeared in the latest Consumer Price Index (CPI) report earlier this week as firming prices in services like dental care and airline fares marked a surprise reversal from the prior softening that had been offsetting higher goods prices from tariffs. The fresh data now puts the Federal Reserve, which targets 2% inflation, in a precarious position as tensions between its dual mandate of price stability and maximum employment begin to surface. Massive downward revisions in July's jobs report last week fueled concerns that the labor market is softening too quickly, strengthening the case for rate cuts. But the hotter-than-anticipated inflation data could suggest the need for more restraint. As of Friday afternoon, markets continued to price in about an 85% probability that the central bank will cut rates in September, according to the latest CME FedWatch Tool. Federal Reserve Chair Jerome Powell's Jackson Hole speech next week could give hints on the Fed's next policy move. The Fed's dual mandate tension Some economists argue the Fed should hold off on rate cuts — or even consider raising rates. "These are broad-based inflationary pressures," Lauren Saidel-Baker, economist at ITR Economics, told Yahoo Finance following this week's hotter-than-expected PPI print. "I see more reason for rates to be rising in order to not let inflation get away from us." Saidel-Baker noted these pressures have been building for years and aren't solely the result of tariffs. She pointed to higher wages and rising energy costs as key drivers now feeding into the data. She also stressed that the full impact of tariffs will take time to emerge. "Inflation is the risk that's on our doorstep, much more so than the labor market," Saidel-Baker emphasized. "Fed officials know that." Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments Chicago Fed president Austan Goolsbee cautioned Wednesday that a continued rise in services prices, similar to what was seen in this week's CPI report, would be worrisome "Services are not tied to the tariffs," he said. "Everyone is hoping that's just a blip. There's noise in the data. If you start to get multiple months where the components suggest that the impact of tariff inflation is not staying in its lane, that would be more of a concern." At the same time, the latest numbers painted a mixed picture. Michael Gapen, chief US economist at Morgan Stanley, told Yahoo Finance earlier this week that the July CPI report offered "some good news and some bad news." "The good news here is that tariff impulse into inflation wasn't as high as anticipated this month," he said. "The bad news is that services inflation was pretty soft in prior months. And it did give the impression to many that, hey, maybe we could ignore tariff inflation because services weakness will offset it. But now, I think a lot of that's reversed." "I'm not ready to say, 'Oh, services is about ready to roar higher," he added, "[but] if it's firming, we do have to watch out." Gapen is still calling for no rate cuts this year, despite the market's near certainty that at least one is coming. "There's enough inflation momentum here that suggests inflation will continue to deviate from the Fed's mandate," he said. "Immigration controls are likely to keep the unemployment rate low. And that means a tight labor market." Read more: How jobs, inflation, and the Fed are all related Despite the recent downward revisions, the labor market has remained relatively strong, supporting consumers as spending patterns hold up. Still, cracks are emerging as payroll growth slows, job openings decline, and continuing claims, or the number of Americans receiving ongoing unemployment benefits, edge higher. Chris Watling, global economist and chief market strategist at Longview Economics, argued that while inflation might firm up over the next few months, the bigger story is the risk of a slowing economy. "The more important factor here is the employment and growth mandate [which] is why the market's focus is shifting,' he said. "The manufacturing sector has had no growth in three years. Housing is deteriorating. I think this is a really clear slowdown in this economy. And I'm amazed the Fed isn't getting on with it." Watling said he believes the Fed should begin easing in September and continue cutting through the end of the year, arguing that the slowdown in underlying growth will outweigh any near-term uptick in inflation. Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
7 hours ago
- Yahoo
Should I sell my vacation home that I dream of living in when I retire to pay off $50K in credit card debt?
Total credit card debt in the US stands at $1.18 trillion this year, with 4.3% of debt in delinquency, according to the Federal Reserve Bank of New York. With these near record-high numbers, many Americans are feeling the pinch and want to find ways to dig themselves out. But should you allow your debt to disrupt your retirement plans? Don't miss Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 6 of the easiest ways you can catch up (and fast) Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan 'works every single time' to kill debt, get rich in America — and that 'anyone' can do it Let's look at the example of Gavin, a 40-year-old married man with two children. He bought a home in the Caribbean in 2019 with the goal of eventually making the house his retirement home. The house is worth $400,000 now, with a $120,000 mortgage balance. Unfortunately, the mortgage loan has a variable interest rate, which is currently at 10.5% with no possible options for refinancing. The home currently generates $700 per month in profit as a short-term rental, but makes less during off off-season and managing it is stressful. Worse, the neighborhood may soon prohibit short-term rentals in the area, so that would be the end of this revenue stream. Additionally, Gavin might also be on the hook for local property taxes and, as a foreign investor, other possible fees and taxes too. On top of this, the buyer is a renter in the US where he currently lives and he has $50,000 in credit card debt. Does it make sense for him to sell the vacation property to pay off what he owes? He's considering buying a home locally and using the rest of the money to invest, build up an emergency fund, or start a college fund for his kids. Selling the vacation home could be a great solution Selling the vacation home in this particular case seems like an easy answer. While it is currently generating a small profit, earning $8,400 per year on a $400,000 asset isn't a great return, especially given the hassle of being the host and the substantial interest he is paying on his mortgage. But losing the short-term rental income would be a major downside. Read more: Nervous about the stock market? Gain potential quarterly income through this $1B private real estate fund — even if you're not a millionaire. Aside from the poor ROI of the home, the interest on $50,000 in credit card debt that he currently has is an absolute financial killer, given that the average credit card interest rate is 21.16% as of May 2025. The $700 per month he is earning from his rental most likely is not even enough to cover the interest that his credit card debt accrues each month. With a home worth $400,000, and assuming closing costs are around 4% (the average is 2% to 5%), this homeowner would still end up with about $384,000 after paying for the transaction fees from the sale of the home. Now, since the home isn't his primary home, it's possible he could owe capital gains taxes if his profits exceeded $250,000 as a single person or $500,000 as a married joint filer. However, since Gavin is married and the home isn't netting in excess of $500,000, he'd likely be spared this tax. He may also need to pay additional sales taxes to the government of his host country. If he doesn't, he could pay off the $120,000 still remaining on the mortgage he owes, as well as his $50,000 in credit card debt and still walk away with around $214,000. That would be a good start to make a down payment on a home in the US for his family (in which he can retire), or to start investing for his future. He could save for his two kids to go to college, start an emergency fund and best of all, free up a lot of income by eliminating his credit card debt and the interest he would be paying on that into the future. In fact, if he uses the money wisely, he could not only set himself up for financial stability, but he could also choose to save to buy another retirement home down the road, when it makes more financial sense. Are there downsides to selling? While Gavin's circumstances make a strong case for selling the home, it's worth looking at whether there are any downsides to doing so, beyond losing the $700 in rental income. Since the home he owns doesn't have a great mortgage, isn't generating a big profit and there's no reason to believe it is a one-of-a-kind home, there's very little downside in cashing out now and using the proceeds to create some more financial stability. The only real risk would be that real estate values skyrocket in his chosen Caribbean retirement destination. This would either price him out of buying his dream retirement home later on or prevent him from earning more on the possible future sale of his vacation home. However, it's unlikely the ROI on Caribbean real estate would exceed the returns he'd get by investing in the stock market in the states or that the increase in the value would be worth paying the interest on the credit card debt and the mortgage combined. There are likely wiser ways to make that money work. So, if he's investing wisely over time, he should likely be able to buy a comparable home as a retiree if he wants to. He could also end up changing his retirement plans if he decides he'd rather stay in the US and be close to his potential grandchildren — and if that happens, it would have been a poor investment to pay for a house that's costly to keep only to end up not retiring there anyway. Selling now with the chance to rebuy later seems like a much better bet. In fact, all signs point to the fact that selling the home seems like the best move in this situation and it could be the start of a much more financially secure — and less stressful — future. What to read next Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now Here are 5 simple ways to grow rich with real estate if you don't want to play landlord. And you can even start with as little as $10 Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
