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Mar 27, 2014

Fed’s Dudley warns against explicit global policy coordination

NEW YORK (Reuters) – While explicit policy coordination among the world’s central banks is unfeasible, a more effective system should be developed to ensure they have access to foreign currency reserves in times of stress, a top U.S. Federal Reserve official said on Thursday.

“Monetary policy meant to suit everybody is likely in the end to suit nobody,” William Dudley, the influential head of the New York Fed, said in a speech that pushed back against criticism that aggressive U.S. policy accommodation has recklessly hurt emerging-market economies.

Mar 27, 2014

No single data point will determine rate rise -Fed’s Pianalto

By Jonathan Spicer

(Reuters) – No single data point will determine when the Federal Reserve finally tightens its policy, a top U.S. central banker said on Thursday, reinforcing the notion stressed by Chair Janet Yellen that a “wide range” of factors would be considered.

Cleveland Fed President Sandra Pianalto, a voting member of the Fed’s monetary policy panel who is stepping down at the end of May, said in a speech that deflation remains a “big risk” for a U.S. economy that is nonetheless making some progress.

Mar 26, 2014

Not foregone conclusion Fed will adopt U.S. repo facility: Plosser

NEW YORK (Reuters) – The U.S. Federal Reserve’s committee of policy-setters has not yet decided to fully embrace a new test facility for so-called reverse repurchase agreements as a tool for conducting monetary policy in the future, Philadelphia Fed President Charles Plosser said on Tuesday.

Addressing the ongoing testing of the Fed’s reverse repo facility, Plosser stressed that the policy-setting Federal Open Market Committee, and not the New York Fed’s open markets desk, will make the final decision on whether to formally adopt the facility.

Mar 25, 2014

Fed officials scramble to clarify timing of U.S. policy tightening

NEW YORK/SAN FRANCISCO (Reuters) – Top Federal Reserve officials rushed on Tuesday to clarify just when the U.S. central bank would finally tighten monetary policy after comments last week from Fed Chair Janet Yellen intensified a guessing game among investors.

Bonds dropped and some economists revised their predictions after a policy-setting meeting last week in which the Fed said it expected to keep interest rates near zero for a “considerable time” after it wraps up a bond-buying stimulus program, which is widely expected to end late this year.

Mar 25, 2014

Rate rise only when Fed certain U.S. recovery well under way: Fisher

NEW YORK (Reuters) – The Federal Reserve will keep interest rates near zero until it is confident the U.S. economic recovery has taken hold, a top Fed policymaker said in an interview on Tuesday, reinforcing the central bank’s view that there would be a “considerable time” between the end of bond-buying and a move to tighten policy.

“We will hold the base rate at a low range until we’re certain the recovery is well under way,” Richard Fisher, president of the Federal Reserve Bank of Dallas, told Reuters.

Mar 25, 2014

Fed’s Fisher lauds study as call for action on too-big banks

NEW YORK (Reuters) – A fresh Federal Reserve study highlights the inability of U.S. law to protect Americans from underwriting the risky activities of “too-big-to-fail” banks, a top Fed policymaker said on Tuesday.

Dallas Fed President Richard Fisher, who has long warned of the economic risks posed by massive banks, said in an interview the series of papers by New York Fed economists shows “it is improper to ask the taxpayer to underwrite the non-commercial banking operations of a complex bank holding company.”

Mar 25, 2014

U.S. banks enjoy ‘too-big-to-fail’ advantage: Fed study

NEW YORK (Reuters) – A landmark study by Federal Reserve economists found that large U.S. banks enjoy a “too-big-to-fail” advantage in financial markets, confirming the suspicions of many Wall Street critics more than five years after the financial crisis.

The series of research papers, published on Tuesday by the U.S. central bank’s influential New York branch, suggests the biggest and most complex banks benefited even after the financial crisis from lower funding and operating costs compared to smaller firms. The researchers used data through 2009.

Mar 12, 2014

Fed vice chair nominee Fischer stresses financial stability

SAN FRANCISCO/ NEW YORK (Reuters) – Stanley Fischer, U.S. President Barack Obama’s pick to be the Federal Reserve’s next vice chair, called on Wednesday for financial stability to be an “explicit focus” of Fed policy, alongside the congressionally mandated goals of price stability and maximum employment.

“The Great Recession has driven home the lesson that the Fed has not only to fulfill its dual mandate, but also to contribute its part to the maintenance of the stability of the financial system,” Fischer said in written testimony released on Wednesday for a Senate confirmation hearing set for Thursday. “Almost always, these goals are complementary. But each of them must be an explicit focus of Fed policy.”

Mar 12, 2014

For eventual tightening, Fed to signal slow rate rises

SAN FRANCISCO/NEW YORK, March 12 (Reuters) – Janet Yellen
has a message to markets: the Federal Reserve will keep interest
rates low for a while yet and, when it does begin to tighten
monetary policy, it will do so only slowly.

For now, the public has zeroed in on when the U.S. central
bank might finally raise rates after more than five years near
zero. But that tells only half the story: just as important for
American families and businesses is how quickly the Fed will
hike borrowing costs, and how high.

Mar 11, 2014

Fed set to ditch ‘threshold’ guidance under Yellen

NEW YORK/SAN FRANCISCO (Reuters) – Janet Yellen’s first policy-setting meeting as chair of the U.S. Federal Reserve will focus on how to finesse a rewriting of the central bank’s promise to keep interest rates low without roiling financial markets.

Fed policymakers will probably decide next week to scrap their threshold of a 6.5 percent unemployment rate for considering a rate rise, and instead embrace new language that is less specific about when tighter policy might come.