The fiscal stars will align again this week. In less than 24 hours, between Wednesday afternoon and midday on Thursday, the financial markets and global economy will see the two biggest central banks in the world square off: the United States of America's Federal Reserve (the Fed) and the European Central Bank (ECB). The meetings come with an additional feature: the official debut of the European group's new president, the Italian Mario Draghi. He will officially take over for Jean-Claude Trichet.
On Wednesday the ECB's two-day meeting with the Fed will conclude. The meetings will be intense, because the institution will only announce its decision through communique, as always, but the meeting will conclude with a customary press conference led by Fed president Ben Bernanke.
It will be the third time in history that Bernanke (or any Fed president for that matter given that this initiative was founded in 2011) expounds on his institution's policies and strategy in this format. This week, the focus will center around two aspects. First, whether America?s central bank will enact another stimulus or not.
It seems that this time around Bernanke will let things run as they are. In August he announced that he would maintain interest rates through 2013 and in September he announced a new issue of public debt and mortgages with money that was already on his balance sheet without having to resort to printing more money, which is something that does occur with quantitative easing (QE).
In regard to printing money, that decision lies in the Fed's assessment about the status of the economy. The latest statistics have shown that the recovery is proceeding at a slow and unsteady pace.
