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Aug 26, 2014
via MacroScope

Fed’s embrace of labor market is complete at Jackson Hole, 20 years later

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By Michael Flaherty, Howard Schneider and Jonathan Spicer in Jackson Hole, Wyo.

To dig deeper into the significance of Federal Reserve Chair Janet Yellen’s message at the annual central banking summit in Jackson Hole this past weekend, go back twenty years to the same event, when a top Fed official sparked a firestorm by showing support for the labor market. At the end of the 1994 symposium, the new Fed vice chairman at the time, Alan Blinder, gave a 14 page overview in which he stressed the point that central banks have a role in reducing unemployment.

The comments prompted speculation that he was opposing the views of his free-market boss, Alan Greenspan, and a media frenzy ensued — a frenzy that people present at the time say Blinder never recovered from. The contrast between what happened at Jackson Hole two decades ago, and what happened there last week shows how far the Fed has swung in its embrace of the labor markets, and how far it is ready to go.

Aug 24, 2014

Pressure builds within Fed to signal new policy course

By Jonathan Spicer, Michael Flaherty and Howard Schneider

JACKSON HOLE Wyo. (Reuters) – Pressure is building within the Federal Reserve for officials to move as early as next month to more clearly acknowledge improvements in the U.S. economy and lay the groundwork for the central bank’s first interest rate hike in nearly a decade.

According to some U.S. central bankers and their close advisers, signs of economic resilience and growing anxiety about the risks of holding rates too low for too long have set the stage for an intense debate over rewriting their policy statement.

Aug 22, 2014

As Fed debates rate path, focus on jobs data stirs its own debate

JACKSON HOLE, Wyo, Aug 22 (Reuters) – The Federal Reserve’s
intensive focus on a wide range of labor market data to guide
policy-making is driving a wedge between its core
decision-makers and others who feel the central bank is straying
from traditional guideposts.

In a speech here on Friday, Fed Chair Janet Yellen gave her
most detailed analysis yet of what still plagues the American
labor market five years after the recession, from stagnant wages
to the large number of part-time workers to those who have given
up the search for work.

Aug 22, 2014

Fed ‘mired’ in debate at margins of labor market: Plosser

By Jonathan Spicer

JACKSON HOLE Wyo. (Reuters) – The Federal Reserve is “mired” in debate over corners of the U.S. labor market that it has little chance of improving, and it should instead prepare the public for an interest-rate rise, a Fed official known for his hawkish views said on Friday.

Charles Plosser, president of the Philadelphia Fed, said in an interview that it was better to tighten monetary policy too soon rather than too late. To get on course to tighten policy, he said, the U.S. central bank must first acknowledge that it can’t fix things at the margins of a labor market that is otherwise looking much better.

Aug 22, 2014

Great Recession’s damage to U.S. labor market was typical -paper

, Aug 22 (Reuters) – The deep recession of
2007-2009 dealt no more permanent damage to the U.S. labor
market than other recent downturns, according to a research
paper prepared for a central banking conference that disputed
the notion it left unusually heavy economic scars.

The paper, which will be presented on Saturday to a some of
the world’s top central bankers and economists, analyzed what
the authors said was a new set of data on “long-term
nonemployment” and found few things that set the so-called Great
Recession apart from other U.S. recessions since 1981.

Aug 21, 2014

U.S. regulators step up warnings to banks for poor risk-spotting

NEW YORK (Reuters) – U.S. regulators are sending some of the biggest global banks verbal warnings as they crack down on the firms’ poor grasp of their own weaknesses, and push for rapid improvements in risk assessment, according to two sources familiar with the matter.

The firms who received the warnings are among the largest banks in the world, but the sources declined to name individual firms because the enforcement actions are not public. Given the regular contact between supervisors and bank officials, the warnings could have come in meetings, phone calls, or letters.

Aug 21, 2014

Exclusive: U.S. regulators step up warnings to banks for poor risk-spotting

NEW YORK (Reuters) – U.S. regulators are sending some of the biggest global banks verbal warnings as they crack down on the firms’ poor grasp of their own weaknesses, and push for rapid improvements in risk assessment, according to two sources familiar with the matter.

The firms who received the warnings are among the largest banks in the world, but the sources declined to name individual firms because the enforcement actions are not public. Given the regular contact between supervisors and bank officials, the warnings could have come in meetings, phone calls, or letters.

Aug 13, 2014

Fed officials urge changes to still-risky U.S. funding markets

NEW YORK (Reuters) – A serious re-evaluation of the still-risky short-term funding market is overdue, two top Federal Reserve officials said on Wednesday, with one urging a supervisory revamp and higher capital requirements for broker-dealers given the threat they still pose to the U.S. financial system.

Among the U.S. central bank’s most influential voices on regulation, the officials issued their warning to bankers, supervisors and academics gathered at the New York Fed for a conference on risks that remain in wholesale funding markets six years after the financial crisis.

Aug 13, 2014

Fed officials urge changes to still-risky U.S. funding markets

NEW YORK, Aug 13 (Reuters) – A serious re-evaluation of the
still-risky short-term funding market is overdue, two top
Federal Reserve officials said on Wednesday, with one urging a
supervisory revamp and higher capital requirements for
broker-dealers given the threat they still pose to the U.S.
financial system.

Among the U.S. central bank’s most influential voices on
regulation, the officials issued their warning to bankers,
supervisors and academics gathered at the New York Fed for a
conference on risks that remain in wholesale funding markets six
years after the financial crisis.

Aug 13, 2014

Insight – Yellen resolved to avoid raising rates too soon, fearing downturn

WASHINGTON/NEW YORK (Reuters) – Approaching a historic turn in U.S. monetary policy, Janet Yellen has staked her tenure as chair of the Federal Reserve on a simple principle: she’d rather fight inflation than another economic downturn.

Interviews with current and former Fed officials indicate that Yellen and core decision-makers at the U.S. central bank are determined not to raise interest rates too early and risk hurting the fragile U.S. economy.