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Everything Is Wonderful, Or Isn’t: European Officials

He said, she said, he said.
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Thank you for the appropriately festive response!

Never mind the Greece and glitter: Mario Draghi couldn't be happier.

European Central Bank President Mario Draghi said the bank’s stimulus efforts are beginning to take hold in the European economy and batted away concerns in financial markets that the bank may have to end its more than €1 trillion ($1.1 trillion) asset purchase program early….

“The euro area economy has gained further momentum since the end of 2014,” said Mr. Draghi. “We expect the economic recovery to broaden and strengthen gradually.”

Not so fast, sayeth Christine Lagarde! There’s rising volatility, deflation, bad loans, low oil prices, the rising dollar, bubbles galore, risk conjunction and plummeting real-estate prices in China! And that’s not even counting Janet Yellen’s cunning plan to destroy the global economy!

A surprise move by the U.S. central bank could send tremors throughout the global financial system as investors adjust their portfolios across assets and markets. Raising short-term rates sooner or more quickly than markets anticipate could cause a rapid jump in longer-term interest rates and a whirlwind of volatility, the fund warned.

Now, whyeverwould the markets beconfused?

A number of Fed officials expressed doubts about beginning in June during the March meeting of the Fed’s policy-making committee; according to an account the central bank published on Wednesday.

Federal Reserve Bank of Richmond President Jeffrey Lacker said Wednesday a good argument can still be made to raise rates at the U.S. central bank’s mid-June policy meeting.

"Now may be a good time to begin normalizing U.S. monetary policy so that it is set appropriately for an improving economy over the next two years," Bullard said in remarks delivered at the annual Hyman Minsky conference. He added that "even with some normalization, monetary policy will remain exceptionally accommodative."

John Williams, president of the Federal Reserve Bank of San Francisco, says he’s done talking about which month the Fed will start to raise its benchmark interest rate.

The Federal Reserve may want to change the way it controls short-term interest rates and maintain a larger asset portfolio than it did before the financial crisis, former Fed chairman Ben Bernanke said Wednesday.

ECB’s Mario Draghi Says Stimulus Is Working [WSJ]
Threats to Global Financial Stability Are Rising, the IMF Says [WSJ Real Time Economics blog]
IMF Sees Danger in Surprise Fed Rate Move [WSJ]
Fed Policy Makes Seem Cool to Rate Increase in June [NYT]
Fed’s Lacker Says a Strong Case Can Be Made for Higher Rates [WSJ Real Time Economics]
Fed’s Bullard repeats call to hike now, cites asset bubble risk [Reuters]
Q. and A. With the Fed’s John Williams: Timing of Rate Rise Is Overrated [NYT The Upshot blog]
Bernanke Suggests Fed Abandon Fed Funds Rate, Keep Balance Sheet Large [WSJ Real Time Economics]


Fed Presidents Play Deal Or No Deal

We all know what's inside J-Yell's metal suitcase this time.

Jeffrey Lacker Hopes Ben Bernanke's Right. But He's Pretty Sure He's Wrong.

It takes a strong man to look at Ben Bernanke's gentle, bearded face and tell him to piss off. Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, is just such a man. Lacker's used every opportunity to let Bernanke and his rotating cast of puppets that they're wrong about the stimulus and that they're imperiling what used to be the Fed's only mission, controlling inflation. And he's apparently doing so at substantial risk to his own standing, because while bickering, name-calling and kicking-and-screaming disagreement is all the rage every else in the District of Columbia, dissent does not go over well at the marble Politburo on Constitution Avenue NW.