“I’m not sure Bailey or Lagarde have the right belief systems. In the case of Lagarde, I’m as sure as dammit the career and reputational risk would be intolerable to her. So my view, on this side of the Atlantic at least, is that a softly, softly approach will prevail and that interest rates will go up slightly, while those in charge prevaricate and hope that this unfortunate inflationary episode does prove to be temporary and passes. We will have a clearer idea of Powell’s intentions later this week when he makes his announcement.”
USAGOLD note: Dominic Frisby exhibits unusually strong faith in central banks’ at a time when it has been increasingly on the wane. Recalling the invention of quantitative easing to combat the Great Financial Crisis of 2008, he says, “we all looked on, baffled and blindsided. Expect similar rabbits to be pulled out of hats.” The ECB recently unveiled its new Transmission Protection Instrument, aimed in the first instance at Italy. It turned out to be pretty much the same old rabbit central banks pulled in 2009. It will purchase the bonds of beleaguered nation-states on a case-by-case basis and print whatever money is required to do so. The program is playing to mixed reviews as reflected in the euro’s descent to parity with the dollar.