Oh, for the casual potency of a Fed policymaker

Making off-hand remarks with the coiled power of a jungle cat.

Minutes released from the last Fed meeting have sent markets into a dive. The minutes in question can be found in full here, but this is the really important bit:

a number of participants stated that an ongoing evaluation of the efficacy, costs and risks of asset purchases might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labour market had occurred

In other words, it has become official that there might (just might) be a limit to the amount of money the Fed hands out. At the moment it's about $85bn a month, and a number of national banks had seemed to believe this could go on for ever. Here's James Mackintosh in the FT:

the scale of the belief in the Fed’s willingness to print money is unprecedented, and backed up by loose policies from the Bank of England, Swiss National Bank and, investors expect, Japan. Only the European Central Bank resists.

So some believed, some doubted, but now Schrödinger's box has been opened, and the cat is a real cat, and not in fact the kind that will live forever. Cue panic.

Well it's kinda maybe been opened. Some people think the comments may have been misinterpreted. Here's Sean Callow of Westpac, in a note to clients:

“We wouldn’t leap to conclusions over the trajectory of QE4, which Fed officials in recent days have suggested would likely be sustained at least into the second half of 2013”

So what's the takehome message? Well, the fact that the markets reacted so dramatically on the news suggests a worrying vulnerablity to the odd ambigious comment from a Fed policymaker. Must be nice to have all that power.

Bernanke on legs. Photograph: Getty Images

Martha Gill writes the weekly Irrational Animals column. You can follow her on Twitter here: @Martha_Gill.

Photo: Getty Images/Christopher Furlong
Show Hide image

A dozen defeated parliamentary candidates back Caroline Flint for deputy

Supporters of all the leadership candidates have rallied around Caroline Flint's bid to be deputy leader.

Twelve former parliamentary candidates have backed Caroline Flint's bid to become deputy leader in an open letter to the New Statesman. Dubbing the Don Valley MP a "fantastic campaigner", they explain that why despite backing different candidates for the leadership, they "are united in supporting Caroline Flint to be Labour's next deputy leader", who they describe as a "brilliant communicator and creative policy maker". 

Flint welcomed the endorsement, saying: "our candidates know better than most what it takes to win the sort of seats Labour must gain in order to win a general election, so I'm delighted to have their support.". She urged Labour to rebuild "not by lookin to the past, but by learning from the past", saying that "we must rediscover Labour's voice, especially in communities wher we do not have a Labour MP:".

The Flint campaign will hope that the endorsement provides a boost as the campaign enters its final days.

The full letter is below:

There is no route to Downing Street that does not run through the seats we fought for Labour at the General Election.

"We need a new leadership team that can win back Labour's lost voters.

Although we are backing different candidates to be Leader, we are united in supporting Caroline Flint to be Labour's next deputy leader.

Not only is Caroline a fantastic campaigner, who toured the country supporting Labour's candidates, she's also a brilliant communicator and creative policy maker, which is exactly what we need in our next deputy leader.

If Labour is to win the next election, it is vital that we pick a leadership team that doesn't just appeal to Labour Party members, but is capable of winning the General Election. Caroline Flint is our best hope of beating the Tories.

We urge Labour Party members and supporters to unite behind Caroline Flint and begin the process of rebuilding to win in 2020.

Jessica Asato (Norwich North), Will Straw (Rossendale and Darween), Nick Bent (Warrington South), Mike Le Surf (South Basildon and East Thurrock), Tris Osborne (Chatham and Aylesford), Victoria Groulef (Reading West), Jamie Hanley (Pudsey), Kevin McKeever (Northampton South), Joy Squires (Worcester), Paul Clark (Gillingham and Rainham), Patrick Hall (Bedford) and Mary Wimbury (Aberconwy)

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.