Here’s an unusual, and entertaining, take on the Federal Open Market Committee (FOMC) on Wednesday from Bank of America.
- “The Maradona Theory of Interest Rates is alive and kicking”
Bank of England Governor Mervin King first formulated the theory back in the 2000s:
- referencing Argentina great Maradona’s second goal against England in the 1986 World Cup (ps. the less said the first one the better ….)
- “He started running towards the goal in the midfield, dribbled six players including the goalkeeper and scored. The most striking feature was that Maradona moved in a straight line towards the goal,”
- “Why did he get away with it? Because England defenders expected him to move either to the right or to the left, so given the defender’s expectations, it was optimal for him to move forward in a straight line.”
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“This is the way central banks conduct monetary policy sometimes. By letting markets believe they will move in a certain direction … they let markets do the easing/tightening for them”
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Enjoy the vid! UK readers might like to skip straight to the 0:45 mark 😉
This article was written by Eamonn Sheridan at www.forexlive.com.