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Communicating economics

| Posted by: Paul Donovan | Tags: Paul Donovan

There is a barrage of communication from the US Federal Reserve, with Chair Yellen leading the way. The task for the Fed is to remind markets that central bank policy is a long-term instrument, which should be shaped by long-term trends. Short-term data of dubious accuracy should not influence decisions.

Draghi of the ECB speaks. In a consensus decision on when to start reducing the ECB balance sheet to GDP ratio (i.e. taper bond buying), it is not clear that Draghi will occupy the middle ground. The ECB president's views should be interpreted with caution.

The US Trumpcare healthcare reforms have run into problems in the wake of a report suggesting 22 million citizens could lose coverage. A number of Republican senators are now openly opposing the measure. The longer this drags on the less time there is for the fiscal debate investors care about.

The UK-EU divorce proceedings had a troubled start; EU negotiator Barnier rejected UK proposals on the rights of EU citizens. The rejection is not what is troubling – it is that Barnier made the rejection in a tweet. Economics by Twitter is never a good idea (follow me @PDonovan_Econ).