The leaders of the central banks of some of the world's major economies -- US Fed Chairman Ben Bernanke, European Central Bank (ECB) President Jean-Claude Trichet and Chinese central bank Zhou Xiaochuan (
But the three, joined by Kazumasa Iwata, the deputy governor of the Bank of Japan (BOJ), gave no hints about the biggest question for consumers: Will interest rates keep rising?
Instead, the men -- the star attractions of the fourth annual European Central Banking Conference -- focused on the technical and academic ways in which central banks formulate monetary policy.
One issue was what role should be played by money supply, something the ECB considers quite important. The Federal Reserve closely follows the money supply but does not let that information alone set policy, Bernanke said.
"Although a heavy reliance on monetary aggregates as a guide to policy would seem to be unwise in the US context, money growth may still contain important information about future economic developments," he said.
Trichet said that strong money supply and credit growth in the 12-member euro zone played a dominant role in the ECB's decision to raise interest rates in five steps from 2 percent in December last year to 3.25 percent last month.
"At that time the signals coming from the economic analysis were not yet so strong," he told the analysts, economists and others who attending the two-day conference. "But the continued expansion of money and credit through the course of 2005 gave an intensifying indication of increasing risks to medium and long-term price stability."
Trichet added that the strong economic growth in the euro zone this year justified the rate increases. Analysts expect another quarter-point increase next month.
"Without our thorough monetary analysis, we could have been in danger of falling behind the curve," Trichet said.
Iwata, too, said monetary policy could not be ignored or relegated to a low profile and cited the affects of external conditions on setting interest rates.
"Price stability was restored after the yen appreciation," he said, referring to the currency's strength in the 1980s. "That reflected investors willing to take more risk."
Zhou, central banker for one of the world's most dynamic economies, said that monetary expansion in China was likely stronger than it should be, but said that low inflation had been a reliable counterweight.
"The expansion of money supply, we think, is a little bit higher than we should have, but inflation is low," Zhou said, adding that unlike the US, EU or Japan, China's economy is one that remains in transition.
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