Ex-Central Bank Officials Debate Monetary Strategies
The Bund Summit, a significant annual financial event in China, wrapped up on Saturday. At the forum held during the summit, former central bank officials from the U.S., Japan, and Europe shared their perspectives on prevailing monetary policies.
TroibNews 
The 2024 Bund Summit in Shanghai, an important event in China's financial calendar, wrapped up this past Saturday. During the summit, past central bank officials from the U.S., Japan, and Europe weighed in on the current state of monetary policy globally.
Amid a climate of economic uncertainty, countries have adopted a range of monetary strategies. Donald Kohn, previously the vice-chairman of the U.S. Federal Reserve, commented on the shift in U.S. monetary policy. "The U.S. Fed is about to initiate a shift in monetary policy from one that has been restrictive for a while to one that is easing like many other central banks," he stated.
Kohn also pointed out that, "inflation has come down significantly over the past few years, though it has not yet gotten to the Fed's target of two percent, while the labor markets have rebalanced quite substantially." He noted the transition from a very tight labor market in recent years to a more balanced situation.
Jean-Claude Trichet, the former president of the European Central Bank, outlined the ECB's recent actions, noting that "the ECB has augmented rates 10 times, and the U.S. augmented rates 11 times," demonstrating strong measures against inflation. Trichet also shared that the "ECB decreased rates by 25 basis point in June," and currently, "inflation has gone down to 2.5 percent."
However, Trichet expressed concerns about persisting inflation, "But the problem for the ECB is that core inflation is not giving signs this year that it is going down as rapidly as was expected, so the core inflation number of 2.8 percent sits largely above the two percent target."
The discussion moved to Japan, where Kuroda Haruhiko, the former governor of the Bank of Japan, explained the unique situation in Japan. "Japan's inflation dynamics have always been different from those in the U.S. and Europe," he said.
Kuroda recalled "a 15 year-long deflation period from 1998 through 2012," followed by the introduction of a two percent inflation target by the Bank of Japan in 2013 and the adoption of Quantitative and Qualitative Monetary Easing policy. Despite overcoming deflation, Haruhiko remarked, "the inflation rate fluctuated around one percent," with no significant wage increases until the Ukrainian conflict in 2022 pushed inflation to three percent.
Highlighting recent policy changes, Haruhiko stated, "The Bank of Japan has decided upon a normalization of monetary policy, raising the short term policy rate from a negative 0.1 percent to positive 0.1 percent." He assured that "the bank will continue this normalization process by raising policy rate gradually toward the neutral rate," which is estimated to be much lower than the target, ranging from one percent to two percent.
Alejandro Jose Martinez for TROIB News
Amid a climate of economic uncertainty, countries have adopted a range of monetary strategies. Donald Kohn, previously the vice-chairman of the U.S. Federal Reserve, commented on the shift in U.S. monetary policy. "The U.S. Fed is about to initiate a shift in monetary policy from one that has been restrictive for a while to one that is easing like many other central banks," he stated.
Kohn also pointed out that, "inflation has come down significantly over the past few years, though it has not yet gotten to the Fed's target of two percent, while the labor markets have rebalanced quite substantially." He noted the transition from a very tight labor market in recent years to a more balanced situation.
Jean-Claude Trichet, the former president of the European Central Bank, outlined the ECB's recent actions, noting that "the ECB has augmented rates 10 times, and the U.S. augmented rates 11 times," demonstrating strong measures against inflation. Trichet also shared that the "ECB decreased rates by 25 basis point in June," and currently, "inflation has gone down to 2.5 percent."
However, Trichet expressed concerns about persisting inflation, "But the problem for the ECB is that core inflation is not giving signs this year that it is going down as rapidly as was expected, so the core inflation number of 2.8 percent sits largely above the two percent target."
The discussion moved to Japan, where Kuroda Haruhiko, the former governor of the Bank of Japan, explained the unique situation in Japan. "Japan's inflation dynamics have always been different from those in the U.S. and Europe," he said.
Kuroda recalled "a 15 year-long deflation period from 1998 through 2012," followed by the introduction of a two percent inflation target by the Bank of Japan in 2013 and the adoption of Quantitative and Qualitative Monetary Easing policy. Despite overcoming deflation, Haruhiko remarked, "the inflation rate fluctuated around one percent," with no significant wage increases until the Ukrainian conflict in 2022 pushed inflation to three percent.
Highlighting recent policy changes, Haruhiko stated, "The Bank of Japan has decided upon a normalization of monetary policy, raising the short term policy rate from a negative 0.1 percent to positive 0.1 percent." He assured that "the bank will continue this normalization process by raising policy rate gradually toward the neutral rate," which is estimated to be much lower than the target, ranging from one percent to two percent.
Alejandro Jose Martinez for TROIB News
