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Sep 23, 2015
via MacroScope

Yellen faces her biggest test after years of Fed coddling markets

They say every top central banker faces a “test,” and this may be it for Federal Reserve Chair Janet Yellen.

Paul Volcker needed convince skeptical Americans he was dead serious about slaying inflation in the late ’1970s and early ’80s; Alan Greenspan calmed the 1987 stock market crash by pledging as much Fed liquidity as needed; and Ben Bernanke, of course, unleashed novel and unprecedented policy stimulus in the face of the worst recession in decades. Yellen, who took the U.S. central bank’s reins early last year, has since managed to wind down some of that stimulus while quietly untangling the Fed from many of the Bernanke-era promises of near-zero interest rates for a long while to come. So far she’s had a pretty smooth ride. But now that she is looking to pull off the first rate hike in nearly a decade, investors, economists, and even former U.S. policymakers are howling about a lack of clear guidance on when it will actually happen.

Sep 21, 2015

After delay, Yellen faces questions over Fed message on rate hike

NEW YORK/ATLANTA (Reuters) – As the U.S. Federal Reserve’s chief communicator, Chair Janet Yellen is under building pressure among her colleagues and global investors to clarify where the world’s biggest central bank is heading and how it is making its decisions.

The calls have come from both her policy opponents like St. Louis Fed President James Bullard and more centrist sympathizers like Atlanta Fed President Dennis Lockhart, as well as market analysts and investors who say they have been confused about the Fed’s direction.

Sep 21, 2015

Bullard to Summers: Leave U.S. policy-making to the Fed

NEW YORK, Sept 21 (Reuters) – A top Federal Reserve official
criticized Lawrence Summers and others who had warned against an
interest rate hike last week, saying the former U.S. Treasury
Secretary should “know better” than to make such recommendations
when the Fed needs to start tightening policy.

“I want to say this forcefully because I think the debate
has drifted away,” St. Louis Fed President James Bullard said on
CNBC television on Monday, his voice rising.

Sep 19, 2015

A divided Fed pits world’s woes against domestic growth

Sept 19 (Reuters) – Federal Reserve
policymakers appeared deeply divided on Saturday over how
seriously problems in the world economy will effect the U.S., a
fracture that may be difficult for Fed Chair Janet Yellen to
mend as she guides the central bank’s debate over whether to
hike interest rates.

Though last week’s decision to again delay an interest rate
increase was near-unanimous, drawing only one dissent, St. Louis
Fed President James Bullard called the session “pressure-packed”
as members debated whether global uncertainty or the continued
strength of the U.S. economy deserved more attention.

Sep 19, 2015

Fed’s Williams still sees 2015 rate hike after ‘close call’

ARMONK, NY (Reuters) – An interest rate hike will likely be appropriate this year given the U.S. Federal Reserve’s decision last week to stand pat was a “close call,” a top Fed policymaker said on Saturday.

John Williams, a centrist and president of the San Francisco Fed, said the arguments for and against beginning to tighten U.S. monetary policy are about balanced now that the economy is on solid footing, giving him confidence in continued economic and labor market growth.

Sep 16, 2015

Agony for Wall St. economists, investors as Fed meets

WASHINGTON/NEW YORK (Reuters) – Wall Street’s top economists are on unfamiliar ground: as the Federal Reserve decides whether to raise interest rates, for the first time in years they are deeply divided on what will happen.

Some observers of the world’s most powerful central bank, which will announce its decision on Thursday, blame the Fed for being unusually enigmatic and sending mixed signals. Is it truly “data-dependent” or has it been swayed by the recent China-induced market gyrations?

Sep 14, 2015

Credibility, ‘gradual’ approach at stake as Fed weighs rate rise

NEW YORK/SAN FRANCISCO (Reuters) – The U.S. Federal Reserve, facing this week its biggest policy decision yet under Chair Janet Yellen, puts its credibility on the line regardless of whether it waits or raises interest rates for the first time in nearly a decade.

In a way it is a “damned if you do, damned if you don’t” situation for the Fed despite months of fine-tuning its message, dissecting economic data, and carefully building a consensus around the idea of a cautious and gradual “lift-off” from near zero rates towards levels it considers normal.

Sep 4, 2015

Muddled U.S. jobs report leaves Fed in a ‘jam’ watching markets

By Jonathan Spicer and Jason Lange

NEW YORK/RICHMOND, Va. (Reuters) – The latest U.S. jobs report was not definitively good or bad enough to help the Federal Reserve decide whether to raise interest rates later this month, leaving the decision hanging on volatility in financial markets over the next couple of weeks.

The economy added 173,000 jobs in August, quite a bit fewer than expected. But employment growth in June and July were revised higher, wage gains last month were better than expected, and the unemployment rate fell to a seven-year low of 5.1 percent.

Sep 3, 2015

As Fed ponders interest rate rise timing, markets overshadow U.S. jobs report

NEW YORK (Reuters) – In calmer times the U.S. employment report due to be published on Friday would be the Federal Reserve’s best and last economic signal before it decides whether to raise interest rates later this month for the first time in nearly a decade.

But the world’s financial markets have been anything but calm recently and, as such, have themselves become the primary determinant of whether U.S. central bankers tighten monetary policy on Sept. 17 for the first time since 2006.

Sep 1, 2015

Rosengren sees gradual Fed rate hikes, downplays timing

NEW YORK, Sept 1 (Reuters) – The Federal Reserve will
probably only gradually raise interest rates, irrespective of
whether it decides to take the first step a few months earlier
or later, a top U.S. central banker said on Tuesday.

The dovish president of the Boston Fed, Eric Rosengren, said
a more modest policy tightening cycle than in the past is
appropriate because of low inflation and threats to U.S.
economic growth.