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Economy

George Magnus: The Fed, the BOJ and the limits of central banking

The concurrent meetings of the Bank of Japan and the U.S. Federal Reserve in the week of Sept. 19 highlighted the stark differences in their positions. While the BOJ is struggling to ease monetary policy, the Fed is struggling to tighten, or more accurately, to reduce monetary accommodation. In both cases, though, what we can read between the lines is a growing concern about the ineffectiveness of monetary policy alone in addressing complex economic circumstances.

The Fed's decision to leave interest rates unchanged again is, in many ways, more straightforward than the BOJ's announcement. The split vote at the Fed, at 7-3 for no change, reveals an interesting picture of division between the rotating Fed presidents and fixed-term governors on the Federal Open Market Committee. Fed Chair Janet Yellen may have to work harder to overcome this divide.

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