Para os críticos, o “Bernanke Put” é agora – a crença de que tal como sob Alan Greenspan, a reserva federal norte americana vai sempre ao socorro de Wall Street. A resposta rejubilante de negociadores aos cortes de 50 pontos base da taxa de juro a curto prazo pela reserva federal, poderá justificar esta suspeita. Mas salvar Wall Street dos seus actores não é o objectivo da reserva. É um produto (infeliz) da tentativa de fazer o seu trabalho.

Por: Martin Wolf
Fonte: Financial Times

Fed must weigh inflation against recession

To critics it is now the “Bernanke put” – the belief that, as under Alan Greenspan, the US Federal Reserve will always ride to the rescue of Wall Street. The jubilant response of traders to the Fed’s 50 basis point cut in the short-term interest rate might justify this suspicion. But saving Wall Street from its follies is not the Fed’s objective. It is an (unfortunate) by-product of the attempt to do its job.

It would be wonderful if those responsible for this most absurd of financial crises could be punished without damaging millions of innocent bystanders. But it is impossible. If the Fed does its job, it helps the financial sector. The latter will, no doubt, recover and then find some new, imaginative and currently unforeseen way to generate a possibly bigger crisis several years hence. Whereupon, it will expect the Fed to do its job, as Wall Street sees it: saving the economy, by saving finance. Moral hazard matters, but only for the poor.

Yet will the Fed always be able to oblige? The answer is not so clear. The resolution of each crisis lays the seeds of the next. Thus, the easing by the Fed after the east Asian and Russian crises of 1997 and 1998 contributed to the subsequent stock market bubble. The dramatic easing after its bursting in 2000 contributed to the recent housing boom. The disruption in money markets brought about by the end of that boom has led to last week’s sharp cut in rates. The question, then, is what this will lead to.

One possible answer would be a true nightmare: the return of inflation. Over the past quarter of a century, the Fed has enjoyed a benign global environment of falling and then low inflation, and falling and then low nominal and real interest rates (see charts). Credibly low inflation explains the “Greenspan put”, which is largely a label for the ability of the Fed to move interest rates in response to shocks without any fear of the inflationary consequences. That freedom has given the Fed the independence and authority Ben Bernanke inherited from his predecessor. But its independence, as Mr Greenspan notes, is not engraved on stone. All central banks are creatures of politics.

Such concerns seem remote today. That is why the Federal open market committee was able to reach its unanimous decision to cut rates, “to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets”. But, wisely, it also “judges that some inflation risks remain, and it will continue to monitor inflation developments carefully”. The Fed seems to have rejected the advice of Martin Feldstein of Harvard University, at this year’s Jackson Hole monetary conference, that it cut rates by up to a percentage point and accept the risk of an upsurge in inflation. But it has also gone some way in the direction he recommended.

How significant then are the inflation risks and why might they be important? At present, these risks do still appear small. Year-on-year headline inflation of consumer prices fell to just 1.9 per cent in August, slightly below so-called “core inflation”, at 2.1 per cent. Given the likelihood of a significant slowdown in consumer spending, the chances are that the economy will be weak: Goldman Sachs suggests that annualised growth will be 1-1.5 per cent in the next three quarters. For 2008, it forecasts growth at just 1.8 per cent, well below trend. If, as seems probable, consumption slows sharply, the economy will weaken yet further.

Does that mean the Fed can ignore inflation? No, because doubts about its commitment to preserving at least the domestic purchasing power of the currency will make its job far harder. Such doubts are possible, as reactions to last week’s cut showed. Stock markets jumped. But so did long-term interest rates, inflation expectations (shown by the gap between index-linked and conventional Treasury bonds) and the price of gold. The dollar tumbled to its lowest level against major currencies. Moreover, unit labour costs rose 4.9 per cent, year-on-year, in the second quarter of 2007, as productivity growth slowed.

True, none of this is yet dramatic. The dollar’s declining external value is inevitable. Given the need to offset weak demand at home with a jump in net exports, it also seems desirable. Mr Bernanke may say that a strong dollar is good for the US economy, but that is an aspiration without a policy and, as such, is misleading, if not meaningless. At 4.6 per cent, 10-year Treasury rates are low, while inflation expectations are merely back where they were in July. As for the price of gold, it is certainly not a pure measure of anxiety about the dollar.

Nevertheless, the Fed cannot appear to ignore the risks of inflation, precisely because the temptations to do so are so evident. Domestically, a huge number of highly indebted households find that their principal assets, their houses, are falling in price. A higher price level is then a far less painful way to restore equilibrium than falling nominal prices. Externally, the US is a huge net debtor. A large dollar devaluation is then a far less painful way to turn it into a net creditor than running current account surpluses, since its liabilities are denominated in dollars.

Given these facts, it is going to be an enduring struggle for the Fed to convince those who have put their faith in the dollar that it is safe. This is not some remote danger. In financial markets, the future is now. If holders of the dollar conclude it is no longer a secure store of value they will dump both the currency and assets dependent on its future value. If that were to happen, the Fed would confront a dreadful dilemma – whether or not to cut rates as the dollar plunged and long-term interest rates soared. Its freedom of manoeuvre would be gone, as in 1979, when Paul Volcker became chairman. A political crisis over its independence might also ensue, further undermining its credibility. Moreover, even if it did dare to cut rates, how much would this assist the economy if long-term rates jumped at the same time?

The Fed’s ability to delight politicians and investors depends on retaining its credibility over inflation. Without that, the Fed will be unable to respond to crises or keep output in line with potential. The Fed may well have been right to be bold last week. But it cannot be foolhardy about inflation. Painfully won credibility is its greatest asset. It must not be lost.

Fonte: Martin Wolf, Financial Times, em 25.Set.2007