THE HINDU Editorial Vocabulary-June 16, 2017- Topic 1
Shoots take root: On Fed hike
The biggest take away from the U.S.
Federal Reserve’s decision to raise the federal funds rate, for a third time in
six months, is its assertion that growth in the world’s largest economy has
gained traction and is on course to warrant further “gradual” rate increases.
Fed Chair Janet Yellen emphasised the factors underpinning this rebound in
economic activity — an “ongoing improvement in the job market and relatively
high levels of consumer sentiment and wealth” that have spurred household
spending, an expansion in business investment, and most significantly, a global
pickup in demand.
This offers more reassurance that the global economy may have
finally re-emerged from the post-financial crisis doldrums. It is also
noteworthy that the economic revival has been happening amid heightened policy
uncertainty worldwide, especially in key areas like trade, as political tumult
continues to roil the U.S. under the Donald Trump administration and, more
recently, the U.K. as well. And while Ms. Yellen reiterated that the American
central bank remained on alert in monitoring inflation developments, given a
recent softening in price gains, the Fed’s decision to announce the contours of
a programme to gradually pare the size of its $4.5 trillion balance sheet is
another sign that the U.S. economic engine is warming up. India’s exporters can
take heart that demand in one of the largest markets for their goods and
services is likely to continue to strengthen in the coming months. The Fed also
bumped up the median projection for U.S. economic growth in 2017 to 2.2%, from
2.1% forecast in March.
Ms. Yellen and her colleagues on the
Federal Open Market Committee have also done well to ward off a 2013 ‘taper
tantrum’-like scenario by flagging the projected path of balance sheet normalisation
— a deliberate and clearly calibrated set of reductions that increase over time
— without detailing a schedule for the start of the process. Clearly spelling
out that the plan to decrease reinvestment of principal payments from
asset-backed and Treasury securities is conditional on the economy staying its
anticipated course, the Fed has earmarked this year as the broad time frame for
its start. India’s monetary authorities can derive some reassurance that they
are not alone in adopting a policy stance that seems counter-intuitive to some
in the light of slowing inflation in their respective economies. While the Fed
describes its stance as “accommodative” to spur further strengthening in labour
market conditions and a sustained return to 2% inflation, the Reserve Bank of
India has said that its “neutral” poise is intended to continue support for
economic expansion while ensuring price stability. The common theme is the
welcome emphasis on consistency and stability in the messaging.
Vocabulary
Assertion: a confident and forceful statement of fact or belief.
Example: His assertion that his
father had deserted the family
Synonyms: declaration, contention, statement, claim, opinion, proclamation
Traction: the grip of a tire on a road or a wheel on a rail.
Example: His car hit a patch of ice
and lost traction
Synonyms: grip, purchase, friction, adhesion
Rebound: bounce back through the air after hitting a hard surface or object.
Example: His shot hammered into the
post and rebounded across the goal
Synonyms: bounce, bounce
back, spring back, ricochet, boomerang
Reassurance: the action of removing someone's doubts or fears.
Example: Children need reassurance
and praise
Contour: an outline, especially one representing or bounding the shape or form
of something.
Example: She traced the contours of
his face with her finger
Synonyms: outline, shape, form, lines, curves, figure, silhouette, profile
Calibrated: mark a gauge or instrument with a standard scale of readings.
Example: The model was calibrated on
the basis of the similar experimental results.
Treasury: the funds or revenue of a government, corporation, or institution.
Example: The country's pledge not to
spend more than it has in its treasury
Synonyms: coffers, purse, finance
department, bank, revenues
Accommodative: fit in with the wishes or needs of.
Example: Any language must
accommodate new concepts
Synonyms: help, assist, aid, oblige, meet
the needs/wants of, satisfy
Spur: a thing that prompts or encourages someone; an incentive.
Example: Profit was both the spur and
the reward of enterprise
Synonyms: stimulus, incentive, encouragement, inducement
Poise: be or cause to be balanced or suspended.
Example: He poised motionless on his
toes
Synonyms: balance, hold oneself
steady, be suspended
