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Apr 28, 2011

Bernanke signals no rush to reverse stimulus

WASHINGTON (Reuters) – Federal Reserve Chairman Ben Bernanke signaled on Wednesday that the U.S. central bank is in no rush to scale back its support for the economy with the labor market still in a “very, very deep hole.”

The Fed trimmed its forecast for 2011 economic growth in a nod to a weak start to the year and bumped up its projections for inflation, which caused some jitters in financial markets.

Apr 27, 2011

Fed signals no rush to tighten after bond buying

WASHINGTON, April 27 (Reuters) – The Federal Reserve
signaled on Wednesday it is in no rush to scale back its
support for the U.S recovery as it cut its forecast for 2011
economic growth. The Fed's policy-setting Federal Open Market Committee said in a statement after a two-day meeting it intends to complete its $600 billion bond buying program in June as scheduled. In the face of headwinds from high oil prices, the U.S. central bank said the economic recovery was proceeding at a "moderate pace" -- a slight change from a statement in March when it said the economy was on "firmer footing." In an updated forecast, the Fed lowered its estimate for growth in 2011 to between 3.1 percent and 3.3 percent from a forecast it made in January of 3.4 percent to 3.9 percent. It lowered its forecast for unemployment but said it would elevated over its three year forecast horizon. The U.S. central bank also raised its estimate of inflation this year to a range of 2.1 percent to 2.8 percent, taking into account a recent surge in oil prices. However, it bumped its core inflation forecasts only marginally to a 1.3 percent to 1.6 percent range. In its earlier post-meeting statement, the Fed had modestly upgraded its assessment of the jobs market, say it was "improving gradually." A month ago it said simply that it appeared to be improving. Importantly, it again expressed confidence that a surge in the cost of oil and other commodities would be transitory and not spark broader inflation. "Inflation has picked up in recent months, but longer-term inflation expectations have remained stable and measures of underlying inflation are still subdued," it said. There were few surprises in the Fed's statement and financial markets largely took it in stride. Stock prices inched higher, the U.S. dollar slipped while bonds were steady. Interest rate futures showed traders continued to bet that the Fed would hold off on raising rates until early 2012. "On policy, the statement confirms that (the bond buying) is over but otherwise leaves everything on the table subject to regular review 'in light of incoming information,'" said Stephen Stanley, chief economist at Pierpont Securities. The statement marked the conclusion -- at least for now -- of the massive expansion of the Fed's balance sheet that helped pull the economy out of its deep recession. Still, the central bank said it would continue to reinvest proceeds from maturing securities it holds to keep its economic support in place, ensuring it would remain a big buyer in debt markets. Some investors, such as Bill Gross from PIMCO, the world's biggest bond fund manager, have predicted a bond market sell-off when the Fed steps out of the picture. The bigger question for investors, however, is when will the Fed actively turn to tighten monetary policy. Markets will look for clues in a question and answer session Fed Chairman Ben Bernanke will hold with journalists at 2:15 p.m. (1815 GMT). The briefing marks the first regularly scheduled news conference by a Fed chairman in the central bank's 97-year history. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a table of the Fed's forecasts: [FED/FCASTS] INSTANT VIEW - [ID:nN27206682] SNAP ANALYSIS [ID:nN27127918] For a comparison by IFR, a unit of Thomson Reuters, of the FOMC's statement on Wednesday with the statement after its March meeting, please click on: r.reuters.com/fet29r Breakingviews: Paul May Push Bernanke More Than Press link.reuters.com/nyt29r Take a Look [ID:nFEDAHEAD] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> OUT-OF-SYNC FED The Fed cut interest rates to near zero in December 2008 and bought close to $1.4 trillion in longer-term securities to help spur a recovery from the economy's deep recession. When the recovery stumbled last year, it launched its latest program to buy government bonds. The plan met with withering criticism domestically and internationally. Even some Fed officials worry it could stoke inflation. The Fed's unprecedented easy money policies have been accused of pushing up the cost of oil and other commodities. Top Fed officials have defended their actions by saying surging commodity costs primarily reflect rapid growth in emerging markets and that a healthy U.S. economy has global benefits. The Fed lags other major central banks, including the European Central Bank, that have already moved to raise interest rates or are poised to do so. This out-of-step U.S. monetary policy has undercut the dollar, which slid to a three-year low against major currencies on Wednesday. Analysts expect the greenback to remain under pressure. Several Fed officials have expressed concern the central bank risks falling behind the curve in responding to price pressures if it does not reverse its ultra-loose stance soon. Although headline inflation has shot higher since the start of the year, core price indexes closely monitored by the Fed are still well below levels that would normally cause alarm. At the same time, higher commodity costs have weighed on consumer spending and the unemployment rate is still at a lofty 8.8 percent. Analysts polled by Reuters expect a report on Thursday to show the economy advanced at a subdued 2.0 percent annual rate in the first quarter, if not slower. It expanded at a solid 3.1 percent pace in the final three months of last year.

Apr 27, 2011

U.S Federal Reserve signals no rush to tighten after bond buying

WASHINGTON (Reuters) – The Federal Reserve signalled on Wednesday it is in no rush to scale back its extensive support for the U.S. economy and said a run-up in commodity prices that has dented growth should be fleeting.

The Fed’s policy-setting Federal Open Market Committee said in a statement after a two-day meeting it intends to complete its $600 billion (362.6 billion pound) bond buying program in June as scheduled.

Apr 27, 2011

Fed signals no rush to change policy

WASHINGTON (Reuters) – The Federal Reserve signaled on Wednesday it is in no rush to scale back its extensive support for the U.S. economy and said a run-up in commodity prices that has dented growth should be fleeting.

The Fed’s policy-setting Federal Open Market Committee said in a statement after a two-day meeting it intends to complete its $600 billion bond buying program in June as scheduled.

Apr 21, 2011

Has the U.S. forgotten it has a strong dollar policy?

WASHINGTON (Reuters) – For years, U.S. Treasury secretaries parroted a line that America was committed to a strong dollar policy. But as the greenback slides close to all-time lows, President Barack Obama’s administration has been noticeably quiet.

Treasury Secretary Tim Geithner last used “strong dollar” language in November, and a glance through his speeches and news databases shows he has had almost nothing to say on the matter since.

Apr 21, 2011

Analysis: Has the U.S. forgotten it has a strong dollar policy?

WASHINGTON (Reuters) – For years, U.S. Treasury secretaries parroted a line that America was committed to a strong dollar policy. But as the greenback slides close to all-time lows, President Barack Obama’s administration has been noticeably quiet.

Treasury Secretary Tim Geithner last used “strong dollar” language in November, and a glance through his speeches and news databases shows he has had almost nothing to say on the matter since.

Apr 14, 2011

G20 faces economic woes but recovery seen on track

WASHINGTON (Reuters) – As global finance chiefs prepared to sit down to a plateful of unsavory economic issues, the United States tried to rouse optimism on Thursday that the global recovery was not at risk of being derailed.

Finance ministers and central bankers from the Group of 20 rich and emerging countries, and the smaller Group of Seven developed nations, meet later on Thursday to weigh the impact of uncomfortably high oil prices, huge sovereign debt burdens and the disasters in Japan.

Apr 13, 2011

G20 to work on imbalances plan amid crowded agenda

WASHINGTON/PARIS (Reuters) – The world’s biggest economies hope to make progress this week on a plan to identify countries that put the global economy at risk, while China warned against any moves that would curb its red-hot growth.

The meeting of the Group of 20 rich and emerging-market nations comes at a time of conflicting economic signals.

Apr 12, 2011

U.S.: G20 to name countries with problem imbalances soon

WASHINGTON (Reuters) – The G20 hopes to make progress on developing guidelines to identify economic imbalances this week and will soon be able to list countries with the biggest problems, a senior U.S. Treasury official on Tuesday.

“I do expect a short list of countries to emerge from this process and those countries will be the focus of a second stage of analysis,” the official told reporters at a briefing ahead of a meeting of the Group of 20 rich and emerging-market nations on Thursday and Friday.

Apr 11, 2011

IMF says sluggish US growth requires easy money policy

WASHINGTON, April 11 (Reuters) – The U.S. economic recovery
is so sluggish that the Federal Reserve needs to keep easy
money policies in place while the government comes to grip with
its debts, the International Monetary Fund said on Monday.

“A credible strategy to stabilize public debt in the medium
term and a down payment on fiscal consolidation in 2011 are
urgently needed,” the IMF said in its World Economic Outlook.