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.

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Jeremy Corbyn secures big victory on Labour's national executive committee

The NEC has approved rule changes which all-but-guarantee the presence of a Corbynite candidate on the ballot. 

Jeremy Corbyn has secured a major victory after Labour’s ruling executive voted approve a series of rule changes, including lowering the parliamentary threshold for nominating a leader of the Labour party from 15 per cent to 10 per cent. That means that in the event of a leadership election occurring before March 2019, the number of MPs and MEPs required to support a candidate’s bid would drop to 28. After March 2019, there will no longer be any Labour MEPs and the threshold would therefore drop to 26.

As far as the balance of power within the Labour Party goes, it is a further example of Corbyn’s transformed position after the electoral advance of June 2017. In practice, the 28 MP and MEP threshold is marginally easier to clear for the left than the lower threshold post-March 2019, as the party’s European contingent is slightly to the left of its Westminster counterpart. However, either number should be easily within the grasp of a Corbynite successor.

In addition, a review of the party’s democratic structures, likely to recommend a sweeping increase in the power of Labour activists, has been approved by the NEC, and both trade unions and ordinary members will be granted additional seats on the committee. Although the plans face ratification at conference, it is highly likely they will pass.

Participants described the meeting as a largely low-key affair, though Peter Willsman, a Corbynite, turned heads by saying that some of the party’s MPs “deserve to be attacked”. Willsman, a longtime representative of the membership, is usually a combative presence on the party’s executive, with one fellow Corbynite referring to him as an “embarrassment and a bore”. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.