Markets Are Looking For a Long-Term Deal: Mann

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Oct. 10 (Bloomberg) –- Rogge Global Partners Head of Economic Research Ranjiv Mann discusses the progress on Capitol Hill on a potential short-term deal on the debt limit with Mark Barton and Anna Edwards on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

It seems progress is being made on capitol hill.

Do you share the optimism?

It's not as if we have not been here before.

In last few years we have gone through the process where we get right to the point of a potential crisis and we come back.

The chances are that clearly we will get some kind of agreement and that has been the scenario through this.

We could get a longer term deal and that is what we are looking for.

They basically have to balance the budget, don't they?

Do you see that happening?

Do you see them being able to pay the interest on their debt for the time being i'm a b on the 17th?

-- time being beyond the 17th?

It's pretty clear that the cash balance of the treasury is going to be pretty much close to $30 billion.

Giving up payments on a daily basis it can be quite large.

Certainly, we don't expect that they would want to get to the point that they would have to go through that but the chances are you get a resolution by the end of this week.

As we know, congress is expected to be in recess next week as well so time is very short.

Chances are they would want to come to an agreement.

The minutes from the most recent fomc meeting at the fed seem to suggest that the u.s. fiscal policy was seen as a policy -- an obstacle even before this.

What kind of effect or you think the shutdown is having on the fed, talks about tapering and the end of that?

It's clear from the fed minutes that this is a key area of concern.

Fiscal policy has been a drag in the order of 1.5% of gdp.

It has barely been able to grow 2%. going into next year, given the expect nation that the u.s. economy will continue to grow stronger than this year, the fear is that any additional fiscal tightening would be a further drag on the economy and that is clearly the key risk going into next year.

The underlying cyclical dynamics of the u.s. economy are still very strong.

What do you think it means that they are so concerned about the political situation over at the fed?

They are fairly concerned about the political situation in washington.

On the one hand, it's all about the data, but they are clearly alert to these political realities.

The fed is operating in this environment where they can do very little on what is going with the fiscal side and they have to be prepared with the indication they have given in its minutes that they are ready to continue to maintain a loose policy and start tapering being pushed into the beginning of next year now.

And even when we do get tapering, chances are we get stronger forward guidance to really make it clear to the markets as they keep doing through the last six months that rates will not be rising anytime soon.

Forward guidance has been a complete success and janet yellen has to take some charge for that.

She is in charge of the subcommittee for communication.

We may see additional strengthening of the forward guidance and get an inflation flaw or the unemployment right to where they think about raising rates.

The likelihood is that there will be a strengthening of that side of policy.

As we know, and an environment where the u.s. continues to grow , tapering is going to happen.

The question is clearly the timing.

Most expectations are that it is being pushed back towards the back end of next year.

We are in an environment where it is doing the job.

The bank of england rate decision today mid day london

This text has been automatically generated. It may not be 100% accurate.


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