With the forces restraining the economy starting to diminish, and with the long-term prospects for productivity growth remaining favorable and monetary policy accommodative, the outlook for economic recovery has become more promising.
"With the forces restraining the economy starting to diminish, and with the long-term prospects for productivity growth remaining favorable and monetary policy accommodative, the outlook for economic recovery has become more promising," Chairman Alan Greenspan and his fellow Fed mandarins said in a statement.
First, the managers decide how to allocate the fund's assets worldwide, looking for countries where monetary policy is favorable for stocks, Mr. Hosking said.
In Japan, for example, while output remains below potential, fiscal and monetary support, combined with favorable global economic conditions, has contributed to particularly strong growth in recent quarters.
Still, others -- who get a favorable hearing from the government -- call for yet more monetary easing.
The speech suggested that Bernanke had adopted a more favorable view of regulation, but he made no mention of using monetary policy to deflate speculative bubbles or of recapitalizing the banking system.
While banks in advanced economies - especially in Europe - were deleveraging, unconventional monetary policies and hype about emerging and frontier markets comprised a favorable backdrop for a massive surge in the latter's bond issuance (Chart 1).
How can I write favorable things about the performance of European welfare states, then turn around and write negative things about European monetary policy and developments?
It seems clear that monetary policy is now rendered ineffectual because of the "liquidity trap" — confirmed by the absence of a favorable reaction to the Federal Reserve's monetary expansion.
