Should central banks publish their interest rate forecasts?

By: Stefan Gerlach, University of Frankfurt

No. The level of uncertainty is simply too high.

Fannie and Freddie on the rope

By: Wolfgang Münchau

When house price are expected to decline by 30%, some strange things are happening

Inflation up everywhere

US inflation reaches 5%, as Fed officially starts to worry; there are first signs that sovereign wealth funds are shifting out of dollars into euros; European car sales were over 7% down in June over last year; Spain has become the 23rd European country to ratify the Lisbon Treaty; in France, meanwhile, the vote over Sarkozy’s constitutional reform will be unfomfortably tight.

Sarko’s diplomacy upsets the Irish

The Irish are up in arms over Sarkozy’s statement, made in private, that they must vote again; euro rises, and equity markets tank as investors are having second thoughts about the Freddie and Fannie bailout; Spain suffers its largest bankruptcy, a a house builder goes belly up; meanwhile, another record in Belgium: The Leterme government lasted for less than half the time that it took to negotiate the coalition.

Sarkozy calls on the Irish to make up their mind or risk relegation

French president says he will propose a solution either in October or December; warns of a two-speed Europe; MEPs say Sarkozy has been the best prepared EU president ever; there are indications of a severe slowdown in euro area industrial output; latest wage rounds suggest no immediate threat from second-round effects; Belgian and French lawyers, meanwhile, have been preparing an accession treaty for Francophone Belgium’s eventual integration into France.

Draghi and Tremonti clash over Robin Hood tax

Bank of Italy governor steps up his criticisms of Berlusconi government’s fiscal policy, amid concern about wider economic impact; Kenneth Rogoff warns that the economic crisis is going to get very severe indeed; former St Louis Fed chairman says Freddy Mac technical insolvent; another inflation hawk is set to join the ECB’s governing council; Jean-Claude Juncker, meanwhile, promise more pressure on China to make yuan more flexible.

Welcome to the bear market

World Stock index down more than 20% triggers an outbreak of pessimism among investors; Bernanke wants to extend the Fed’s liquidity bail-out for investment banks; euro area real world interest rates are high and rising; the euro conversion rate for the Slovakian crown was fixed yesterday; the Netherlands has now ratified the Lisbon, as Ireland becomes increasingly isolated; Germany’s finance minister Peer Steinbruck, meanwhile, says he is sorry for having appeared to express displeasure at the ECB’s latest rate increase.