Draghi Disappoints and the IMF Warns About the US Fiscal Cliff
Friday, 3 August 2012
While most market players are enjoying summer holidays, many investors are waiting on the sidelines in cash.
A US bill sponsored by Congressman Ron Paul would require the Federal Reserve to be subjected to an audit of monetary policy, including deliberations over changes to the benchmark interest rate.
US Fed chairman, Ben Bernanke, claimed it would diminish the Fed’s independence and subject policy making to political pressure.
The bill, passed US Congress 327-98, and needs Senate approval plus President Barack Obama’s signature before becoming law.
Christine Lagarde, Head of the IMF, cautioned policy makers on both sides of the pond that they “should continue to be in crisis management mode” to deal with both the euro-zone debt crisis and the gaping US fiscal cliff.
And, she added, there are “serious questions about the US economic future” if policymakers fail to avert a fiscal cliff before January, at which point government spending will drop and taxes will rise sharply.”
The global economic downturn is not going away until some drastic steps in fiscal policy are undertaken.