Current and former central bankers from around the world meeting in Jackson Hole, Wyoming, say an uneven global economic recovery is likely to stay on track despite worries about the US economy.But the Wall Street Journal today reported several foreign ce
Current and former central bankers from around the world meeting in Jackson Hole, Wyoming, say an uneven global economic recovery is likely to stay on track despite worries about the US economy.
But the Wall Street Journal today reported several foreign central bankers said they were struck by the unusual degree of pessimism they were seeing in the United States.
"I can't wait to get back to my side of the world," said Reserve Bank of New Zealand governor Alan Bollard.
Growth in New Zealand, seen at around 3 percent this year and next, had been underpinned by strength in Australia and China, the newspaper reported.
The Jackson Hole meeting usually gives Dr Bollard a handle on just how bad things are in the world economy, and local commentators have suggested that if he returns convinced that the world is slowing faster than thought, then NZ is less likely to have another boost in the official cash rate (OCR) in September.
Some have pointed to a string of poor local data lately and BNZ economists are predicting there will be a pause by Dr Bollard in both September and October, even though the New Zealand economy is expected to continue to deliver unspectacular growth.
The annual conference at Jackson Hole -- several days of presentations, discussions, dinner-table conversation and tramping -- is staged by the US central bank, the Federal Reserve, where officials are consumed by a debate about whether they should do more to support growth and to prevent already-low inflation from falling further.
The top option -- laid out by Fed chairman Ben Bernanke in a weekend speech -- would be to resume buying long-term bonds to drive long-term interest rates down more. The Fed already has purchased $US1.7 trillion worth of government bonds and mortgage debt and long-term rates are at their lowest levels in decades.
The Bank of England tried a similar move last year, and its deputy governor, Charles Bean, told the conference that though such purchases can be an effective way to push down interest rates and spur growth, they were best used only at dire moments.
"Asset purchases are probably best kept in the locker marked 'For Emergency Use Only', " Mr. Bean said.
Most others at Jackson Hole endorsed Mr Bernanke's view that the US economy would resume moderate growth in 2011 after a sluggish second half of this year.
A nagging worry among central banks is the heavy burden of debt weighing on governments around the world. Jacob Frenkel, former head of the Bank of Israel, termed it the "gorilla in the room". Added Arminio Fraga, partner at Gavea Investimentos and former head of Brazil's central bank: "This is the issue for the next 10 years.
