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Central banking is more than tinkering with interest rates

Money Control · 2m

As central banks gather at the annual Jackson Hole Wyoming conference, the focus remains on the Federal Reserve's upcoming meeting. While there is a public outcry over high food prices and geopolitical tensions add uncertainty to the market, indicators such as weak job reports and falling inflation suggest a rate cut in September. However, amidst these discussions, it is important to question the frequency of central bank meetings. Most central banks currently meet eight times a year, allowing for more frequent updates but potentially leading to excessive tinkering with rates. While more frequent meetings have not necessarily resulted in fine-tuning for central banks like the Fed and the People's Bank of China (PBOC), meeting less often may free up resources for crucial regulatory and supervisory functions. Ultimately, a balance needs to be struck between timely decision-making and allocating resources effectively.