Aug 23 (Reuters) – The Federal Reserve faces more severe
risks if it tightens policies too early than if it waits too
long, a potential long-shot candidate to run the U.S. central
bank wrote in a paper published this month.
Former Fed Vice Chairman Donald Kohn said the decision to
exit easy-money policies will be more difficult this time
around, arguing that a move to raise interest rates should hinge
on “the risk of overheating and of a sustained rise in inflation
(Reuters) – Three U.S. Federal Reserve officials weighed in on Friday on the key question of when to reduce the central bank’s bond buying, but their divergent views offered little more clarity for investors trying to predict what will happen at a Fed policy meeting next month.
The comments by Atlanta Fed President Dennis Lockhart, his St. Louis counterpart, James Bullard, and John Williams of the San Francisco Fed all suggested U.S. monetary policymakers want to keep their options open headed into a much-anticipated meeting in Washington on September 17-18.
NEW YORK, Aug 23 (Reuters) – A new chairman is just the
beginning of what could be a big leadership change at the
Federal Reserve next year, giving investors yet another reason
to second-guess the U.S. central bank’s plan to scale back its
support for the economy.
Up to six officials who would otherwise vote on monetary
policy, or half of the central bank’s voting ranks, could
conceivably be gone in 2014, most of them by the end of January.
NEW YORK (Reuters) – A few Federal Reserve officials thought last month it would soon be time to slow the pace of their bond buying “somewhat” but others counseled patience, according to meeting minutes that offered little hint on when the U.S. central bank might reduce its purchases.
The minutes of the Fed’s July 30-31 meeting, released on Wednesday, showed that almost all of the 12 members of the policy-making Federal Open Market Committee agreed changing the stimulus was not yet appropriate.
By Rachelle Younglai
More than 30 law and economics professors sent President Barack Obama a letter on Monday urging him to choose Federal Reserve vice chair Janet Yellen to serve as the next Fed chairman instead of former Treasury Secretary Lawrence Summers.
The professors from schools such as Cornell University Law School, Tulane University Law School and Duke Law School praised Yellen’s years of experience as a central banker and said she warned as early as 2005 about the housing bubble. They echoed many of the same concerns that some Democratic Senators have expressed over Summers’ role in preventing derivatives from being regulated and breaking down the walls between investment and commercial banking.
NEW YORK (Reuters) – Janet Yellen is still seen as the most likely successor to U.S. Federal Reserve Chairman Ben Bernanke, according to a Reuters poll of economists, despite a swell of speculation in recent weeks that Lawrence Summers might have the inside track.
The poll, released Wednesday, found that 26 out of 39 economists predicted that Yellen, the Fed’s current vice chairman, would take the reins at the U.S. central bank in February, 2014. Only eight thought the job would go to Summers, a former U.S. Treasury secretary.
The buzz on who will replace Ben Bernanke as Federal Reserve chairman has grown this year and amplified recently with talk of Lawrence Summers as a real possibility. There is also lingering speculation over Timothy Geithner, another previous U.S. Treasury Secretary, and former Fed Vice Chair Roger Ferguson among others as possible successors. Bernanke has provided no hint he wants to stay for a third term.
But above the din the central bank’s current vice chair, Janet Yellen, has remained the front-runner. Her deep experience and implicit policy continuity has crowned her the heir apparent until proven otherwise. A Reuters poll of economists showed Yellen was seen as far and away the most likely candidate.
July 17 (Reuters) – Federal Reserve Chairman Ben Bernanke on
Wednesday is expected to balance a message of enduring central
bank support for the U.S. economy with a reminder that the Fed’s
ultra-easy policies cannot last forever.
The head of the U.S. central bank will probably seek to use
his testimony to Congress on monetary policy to calm the nerves
of jittery investors worried about life without the Fed’s $85
billion in monthly bond purchases.
JACKSON HOLE, Wyoming (Reuters) – The wide divergence of opinion within the Federal Reserve over when to wind down its unprecedented support for the U.S. economy was on full display on Friday, starkly illustrating Chairman Ben Bernanke’s leadership challenge for the rest of this year.
St. Louis Fed President James Bullard and Charles Plosser, his counterpart at the Philadelphia Fed, sat on the same panel at a conference here, but sang quite different tunes on what to do about the U.S. central bank’s massive bond-buying program.
JACKSON HOLE, Wyoming (Reuters) – The U.S. Federal Reserve should commit to tightening policy when the unemployment rate falls to a 6.5-percent “trigger,” instead of just using that level as a rough guidepost for considering a rate rise, a top U.S. central bank official said on Friday.
The proposal by Philadelphia Fed President Charles Plosser runs against the grain of most other U.S. monetary policy-makers, who have increasingly stressed that interest rates could well stay near zero well after the U.S. jobless rate hits that level.