International monetary policy coordination seems inappropriate – Commerzbank

Does "international policy coordination" make sense? Coordination is not always a good thing, according to economists at Commerzbank.

The more aggressive the Fed is, the weaker the euro will become

“If Lagarde wants higher EUR/USD levels she either has to tighten her own monetary policy further (which entails real economic pain) or she has to convince Fed governor Jerome Powell to ease his own fight against inflation.”

“If Lagarde supports the idea of coordinating monetary policies she demands nothing else but the Fed abandoning its inflation target so that she herself faces an easier task.”

“International monetary policy coordination is too obviously not a good deal for the Fed. The fact that in the mid-80s the Bank of Japan accepted such a deal was the original sin which in the end caused all the issues Japan had to face over the past 40 years. And last but not least: a move away from the Fed’s restrictive monetary policy does not sit easily with the political landscape in the US these days. Lagarde’s appeal has little prospect of succeeding.”