Central banks employing forward guidance risk creating financial instability by revising the policy or keeping borrowing costs low for too long, according to economists at the Bank for International Settlements.
The pound fell against the euro this week, touching an almost one-month low, as European Central Bank President Mario Draghi refrained from adding stimulus, damping the relative allure of the British currency.
The euro rallied for a fifth week as European Central Bank President Maro Draghi said he expects inflation in the currency bloc to gradually rise, damping bets that policy makers would reduce the benchmark interest rate.
The dollar rose to a six-week high against the yen as U.S. employment gains exceeded forecasts, boosting speculation that the Federal Reserve will continue to pare monetary stimulus that’s seen as debasing the currency.
German stocks fell, with the DAX Index posting the biggest weekly drop since January, as the euro strengthened and investors weighed data that showed U.S. hiring accelerated even as the unemployment rate rose in the world’s largest economy.