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‘Fed to blame for commodity boom’

Federal Reserve policy rather than market speculation is to blame for surging commodity prices, says New Star economist and strategist Simon Ward.

New Star forecasts that oil at $140 a barrel could thwart the expected second-half recovery in US growth.

Ward says that instead of cutting interest rates, the Fed should raise them to trigger a correction in commodity prices. Goldman Sachs’ commodity price index stabilised from the middle of 2006 as the Fed increased interest rates above 5 per cent and Ward claims the surge in commodity prices only began after the Fed started cutting rates aggressively last autumn.

He believes a tightening of Fed policy will be needed to burst the bubble of escalating commodity prices, just as he says it was an increase in Fed rates that burst the technology, media and telecoms bubble of the late 1990s.

Ward says: “The Fed has damaged the economy by buckling to the demands of Wall Street interest rate doves. A commitment to a stable dollar, backed up if necessary by policy tightening, would be the best route to a recovery.”


Fortis ejects chief executive

Fortis chief executive Jean-Paul Votron has been ousted from the Belgian bank. A statement said the board of directors of Fortis, along with Votron, have decided to terminate his contract “by mutual agreement” and in the interest of the group.

Broker Talkback

Is the Association of British Insurers doing enough to tackle poor provider marketing material on the open market option for annuities?

Yes 25%
No 75%

Brexit Commentary from Natixis Global Asset Management

By David F Lafferty, CFA, SVP – Chief Market Strategist Thursday’s historic Leave vote in the UK will have both immediate and long-term consequences for the global economy and financial markets. The initial flight-to-quality reaction across asset classes has been exacerbated by the market’s misplaced confidence in a Remain victory leading up to the vote. Stock markets […]


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