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The Fed decided to continue its tapering cycle last week without seeing increasing downside risks for activity near term.
— PETER EAVIS In December 2007, the Fed forecast that the economy would avoid a recession, despite the financial turmoil and despite the increasing downside risk.
The Fed cited a weakening economic outlook and increasing downside risks to growth in announcing the move.
"The committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth," said the Fed.
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With weaker-than-expected global growth for the first half of 2014 and increased downside risks, the projected pickup in growth may again fail to material- ize or fall short of expectations.
In a statement, Mr. Draghi noted "increased downside risks to the economic outlook" and said that, judging by futures prices for commodities, annual inflation rates should fall below 2 percent again in early 2013.
And although the bank's staff have barely changed their GDP forecasts from March they expect output to fall by 0.1% in 2012 and to rise by 1% in 2013 Mr Draghi emphasised the increased downside risks to that projection.It was probably unrealistic to expect that Mr Draghi would act at this juncture.
Separately, Bank of America Merrill Lynch analysts also warned that there was an increased "downside risk" to the economy.
Declining inflation and increased downside risk to growth hint that another round of easing by the central bank is imminent.
But when the market is under pressure and the big put open interest below the market is "threatened" with moving into the money (or actually does move into the money), there can be sharp delta-hedging declines, as those short the puts scramble to short the market to protect their increased downside exposure.
Merrill said the management change indicates Ford's turnaround plan is no longer working, thus "increasing the downside risk to our estimates".
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com