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Feb 28, 2014

Economists warn of more market ‘tantrums’ as U.S. Fed tightens

NEW YORK (Reuters) – The market turbulence of last year’s “taper tantrum” is likely to return when the Federal Reserve decides to raise interest rates, some top U.S. economists concluded in a research paper that warns that more policy stimulus today can spark bigger disruptions in the future.

The paper, published on Friday, focused on the May-June taper tantrum, when then Fed Chairman Ben Bernanke’s talk of less stimulus sparked a market drop, as well as on this year’s sell-off in emerging markets. It argues that investors in mutual funds, though unleveraged relative to more tightly regulated banks, can destabilize things when they rush to sell.

Feb 28, 2014

Weather seems to blame for U.S. slowdown, Fed’s Yellen says

By Jonathan Spicer and Krista Hughes

(Reuters) – Unusually harsh winter weather appears to be behind recent signs of weakness in the U.S. economy, Federal Reserve Chair Janet Yellen said on Thursday, suggesting the central bank was poised to press forward in ratcheting back its stimulus.

Testifying to the Senate Banking Committee, Yellen said the Fed would watch carefully to ensure weather was indeed the culprit, but she reiterated that it would take a “significant change” to the economy’s prospects for the Fed to put plans to wind down its bond-buying program on hold.

Feb 27, 2014

Yellen nods to cold weather, says unclear impact on economy

By Jonathan Spicer

(Reuters) – Federal Reserve Chair Janet Yellen said on Thursday the central bank would be on alert to make sure recent signs of weakness in the U.S. economy are due to cold weather and storms, and not signals of a more fundamental slowdown.

“Since my appearance before the House committee, a number of data releases have pointed to softer spending than many analysts have expected,” Yellen, who took the reins at the Fed on February 1, told a Senate Banking Committee hearing, referring to a February 11 testimony.

Feb 27, 2014

Looking back, Pianalto praises Fed stimulus

By Jonathan Spicer

(Reuters) – A long-serving Federal Reserve policymaker on Wednesday praised the U.S. central bank’s use of both asset purchases and so-called forward guidance on interest rates as effective tools that have helped the U.S. economy recover from recession.

Sandra Pianalto, who is stepping down at the end of May after 10 years as president of the Federal Reserve Bank of Cleveland, also predicted that new Fed Chair Janet Yellen would continue “building consensus and being open-minded” at policy-setting meetings in the years ahead.

Feb 24, 2014
Feb 24, 2014
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Feb 22, 2014
Feb 21, 2014

Records show Fed on edge during darkest days of 2008 crisis

Feb 21 (Reuters) – Federal Reserve policymakers, in an
emotional meeting on one of the darkest days of the 2008
financial crisis, were worried the failure of Lehman Brothers a
day earlier would wreak havoc on a teetering financial system
but feared cutting already low interest rates might prove an
over-reaction.

Transcripts of the U.S. central bank’s meeting on Sept. 16
of that year, released on Friday, showed then Fed Chairman Ben
Bernanke flatly telling his colleagues he was philosophically
torn about the collapse of the investment bank.

Feb 21, 2014