Interview and Conversation between SGM’s Charles Porter and Dr. Waltraud Schelkle of the London School of Economics

This week, foreign exchange specialist Charles Porter spoke with Dr. Waltraud Schelkle. In this article we transcribe a segment of the full interview. It provides an analysis and contextualisation of the Federal Open Market Committee’s monetary policy decision later this evening, and Janet Yellen’s statements throughout this week.

                  Charles Porter, SGM Foreign Exchange

Today SGM joins Dr Waltraud Schelkle who’s Associate Professor of Political Economy, here, at the London School of Economics. Waltraud has been reading Political Economy for over 18 years and it’s an honour that she joins us here today:

We’ve heard Mario Draghi the other day, when he was at Jackson Hole. He said the global recovery is firming up. Philip Lowe echoed those remarks in Australia saying global growth is really quite good… despite the fact that it was not trickling down to Australia!

We had a Canadian rate hike decision and they also said that the global economy is just good enough for us to facilitate doing this now. And the Bank of England is almost doing the same thing; saying, ‘if growth continues we can look to put up interest rates in the next few months’.

Does that mean the global recovery really is over?

                  Dr. Waltraud Schelkle, London School of Economics

Yes, I think so. I have no better information than them so I trust they are right. I find it more puzzling why they are actually not starting and haven’t already started to raise interest rates. I am genuinely puzzled.

                  Charles Porter, SGM Foreign Exchange

And why is that? Where is the puzzle? Is it because the global recovery is so good?

                  Dr. Waltraud Schelkle, London School of Economics

It’s fairly solid now and these interest rates are too low. The rest of the economy is not doing as well in terms of the living standard of ordinary working people that has stagnated for 10 years, while we already speak of some overvalued stock markets. I mean, that then when a central banker should say, ‘it’s probably time to raise interest rates’.

It seems almost like Alan Greenspan; always finding a reason why we should not do anything and just sit on his hands. I am genuinely puzzled why we haven’t already started.

Watch the interview here: