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Dec 1, 2014

Insight – U.S. Fed rattled by elusive inflation, but loath to sound alarm yet

NEW YORK/SAN FRANCISCO (Reuters) – With the U.S. economy humming along at its fastest clip in more than a decade, the Federal Reserve should be confident about its ability to weather a global slowdown and start lifting interest rates around the middle of next year.

But then there is inflation.

Interviews with Fed officials and those familiar with its thinking show the mood inside is more somber than the central bank’s reassuring statements and evidence of robust economic health would suggest. The reason is the central bank’s failure to nudge price growth up to its 2 percent target and, more importantly, signs that investors and consumers are losing faith it can get there any time soon.

Dec 1, 2014

Fed rattled by elusive inflation, but loath to sound alarm yet

NEW YORK/SAN FRANCISCO (Reuters) – With the U.S. economy humming along at its fastest clip in more than a decade, the Federal Reserve should be confident about its ability to weather a global slowdown and start lifting interest rates around the middle of next year.

But then there is inflation.

Interviews with Fed officials and those familiar with its thinking show the mood inside is more somber than the central bank’s reassuring statements and evidence of robust economic health would suggest. The reason is the central bank’s failure to nudge price growth up to its 2 percent target and, more importantly, signs that investors and consumers are losing faith it can get there any time soon.

Nov 28, 2014

Fed’s latest invention holds promise for controlled rate rise

NEW YORK (Reuters) – The Federal Reserve’s latest market proposal could help it smoothly raise interest rates and bring far more banks into direct contact with the U.S. central bank in a way that another tool, unveiled last year, could not.

Analysts have applauded a draft Fed idea to offer lenders segregated cash accounts to be used as collateral for transactions with private investors. Such accounts could be an “additional supplementary tool” as the central bank returns to a more normal policy stance, according to minutes of the Fed’s Oct. 28-29 policy meeting, which were released last week.

Nov 7, 2014

Mester floats changes to the way Fed makes forecasts

NEW YORK, Nov 6 (Reuters) – A top Federal Reserve
policymaker on Thursday painted perhaps the clearest picture yet
of how the U.S. central bank should improve the way it forecasts
policy changes and economic developments.

Loretta Mester, president of the Cleveland Fed and a member
of the central bank’s communications committee, detailed three
“suitable amendments” to widely cited charts that the Fed
publishes quarterly showing the expectations of its individual
policymakers.

Oct 31, 2014

Senators set Nov. 21 hearing on New York Fed examination tapes

NEW YORK, Oct 31 (Reuters) – A U.S. Senate subcommittee
hearing is set for Nov. 21 to investigate whether the Fed’s
relationship with the banks it regulates is too cozy, following
the release of secretly recorded conversations between the
Federal Reserve Bank of New York and Goldman Sachs officials.

New York Fed President William Dudley, one of the most
powerful U.S. central bankers, is set to testify before the
subcommittee on Financial Institutions and Consumer Protection,
according to a Senate aide. Other witnesses were not yet
confirmed.

Oct 30, 2014

Efforts to replace Fed hawks Plosser, Fisher pick up speed

By Jonathan Spicer and Ann Saphir

(Reuters) – Two regional Federal Reserve banks have taken steps to replace their hawkish presidents, Charles Plosser and Richard Fisher, whose departures early next year could change the tenor of debate within the U.S. central bank’s policy-setting committee.

The Philadelphia Fed said on Thursday it had hired executive search firm Korn Ferry to find a successor to Plosser, 66, who will retire on March 1 after more than eight years at the helm. A committee of Philadelphia Fed directors working with Korn Ferry will consider “a diverse group of candidates from inside and outside” the Fed, it said.

Oct 29, 2014

Yellen reins in Fed hawks with a few choice words

SAN FRANCISCO/NEW YORK, Oct 29 (Reuters) – Federal Reserve
Chair Janet Yellen persuaded two hawkish colleagues to join her
pledge on Wednesday to keep interest rates low for a long while,
winning them over by sounding an optimistic tone on the U.S. job
market and inflation.

Charles Plosser and Richard Fisher, chiefs of the regional
Philadelphia and Dallas Fed banks, respectively, had dissented
at the U.S. central bank’s last meeting in September and had
argued for ditching a promise not to raise rates for a
“considerable time” after ending a bond-buying stimulus program.

Oct 29, 2014

U.S. Senate hearing planned on tapes of Fed-Goldman meetings

NEW YORK, Oct 29 (Reuters) – An influential U.S. senator
aims to hold a public hearing after secretly recorded
conversations between regulators at the Federal Reserve Bank of
New York and officials at Goldman Sachs raised questions about a
too-cozy relationship.

Sherrod Brown, a Democrat on the Senate Banking Committee,
has not yet confirmed a date. But “Brown is working to hold a
hearing,” a spokeswoman said on Wednesday, confirming an earlier
report by Bloomberg.

Oct 27, 2014

Worried on low inflation, Fed seen offering soothing words

NEW YORK (Reuters) – The U.S. Federal Reserve this week will likely reinforce its stated willingness to wait a long while before hiking interest rates after a volatile month in financial markets that saw some measures of inflation expectations drop worryingly low.

The reassurance will be all the more necessary given that the U.S. central bank is all but certain to announce the end of its massive bond-buying stimulus when it wraps up a two-day meeting on Wednesday.

Oct 21, 2014

Fed spotted JPMorgan ‘Whale’ risks years before scandal -inspector

NEW YORK/WASHINGTON, Oct 21 (Reuters) – The Federal
Reserve’s New York branch knew about risks JPMorgan Chase & Co
was taking with its massive “London Whale” derivatives bets four
years before they imploded, but it failed to act properly to
head them off, the U.S. central bank’s inspector general said.

The Fed’s Office of Inspector General said on Tuesday one of
the key flaws it uncovered in its probe of the 2008 transaction
at the Wall Street bank was the New York Fed’s over-reliance on
certain personnel who left the supervisory team in 2011. That
created a “significant loss of institutional knowledge” within
the team assigned to inspect JPMorgan, the report said.