After several years of working against each other, global central banks are cornered

The Federal Reserve has clearly chosen external stability over inflation risk here.
  • “Working against each other” has been a multi-year period of currency war.
  • The January upset in international markets, among other things leading to U.S. mortgage rates with in an inch of the all-time record low, was entirely due to a repricing of global growth prospects (down) and central bank reaction.
  • Central bankers talk with each other, in communications as secret as nuclear hot-lines. They try not to surprise each other, and do what they can for each other.

This week we got the usual run of ambiguous economic data and a no-action Fed meeting. Nobody expected the Fed to raise its rate, so all is ho-hum. But — not ho-hum. Not at all. On the surface, in plain sight, a very big story, but too technical for normal media, and so either ignored altogether or published garble.