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Mar 4, 2015
via MacroScope

The more things change: Fed wrestled with same policy “exit” issues in 2009

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The Federal Reserve faces two big challenges in the months and years ahead: how to finally “liftoff” after more than six years of rock bottom interest rates, and how to begin drawing down its $4.5-trillion balance sheet after three massive rounds of bond purchases. But, it turns out, those questions were being raised at the U.S. central bank as far back as 2009.

That year the Fed was experimenting with what would be its first round of bond-buying known as quantitative easing, or QE. According to transcripts of its June meeting, staff made two presentations on an “exit strategy” from the unconventional accommodation, with then Fed Chairman Ben Bernanke telling colleagues: “I promised we would focus today a good bit on our exit strategy, that is, on how we’re going to unwind the policies that we have put in place.”

Mar 4, 2015
via MacroScope

Transcripts show just how scary things were getting for Yellen and the Fed in 2009

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 The U.S. Federal Reserve just released full transcripts of its crisis-fighting meetings of 2009, when the U.S. economy was in the depths of recession and unemployment was soaring to 10 percent. Janet Yellen, who at the time was head of the San Francisco Fed, gave a sense of just how scary things were getting:

“The economic and financial news has been grim,” she told colleagues at a mid-March policy meeting, according to the transcripts. “Things are now so bad that I actually open the Greenbook with greater trepidation than my 401(k).”

Mar 4, 2015

Fed’s Yellen questions whether Wall Street ethics up to par

By Jonathan Spicer

(Reuters) – The head of the U.S. Federal Reserve took a swipe on Tuesday at unlawful and unethical behavior at banks, saying it raises questions over whether the values embedded on Wall Street have improved enough in recent years.

Fed Chair Janet Yellen cited the many improvements since the 2007-2009 crisis at both financial institutions and the U.S. central bank that monitors them. But large banks must continue to fix their internal governance and risk controls, she said, or the Fed will take “swift and meaningful” action.

Mar 2, 2015

Philadelphia Fed names Patrick Harker as Plosser’s successor

March 2 (Reuters) – The Philadelphia Federal Reserve on
Monday named Patrick Harker, one of its directors and the head
of the University of Delaware, as its president and the newest
U.S. monetary policymaker.

Harker, 56, begins the job July 1 and succeeds Charles
Plosser, an outspoken and hawkish Fed official who retired on
Sunday after more than eight years at the helm.

Feb 27, 2015

BOJ’s Nakaso says commitment to price goal ‘unshakable’

NEW YORK (Reuters) – The Bank of Japan’s commitment to achieving its 2 percent price target is “unshakable,” its deputy governor said on Friday, signaling that he has no intention of watering down the goal despite a slowdown in inflation driven by slumping oil prices.

BOJ Deputy Governor Hiroshi Nakaso said Japan now has a good chance of witnessing a “true dawn” with the economy emerging from the hit from last year’s consumption tax hike and now back on a sustained growth path.

Feb 27, 2015

Dudley, top U.S. economists urge later Fed rate hike

NEW YORK (Reuters) – Raising interest rates too late is safer than acting too early, an influential Federal Reserve official said on Friday, endorsing a high-profile research paper that argues that the U.S. economy, given time, can rebound to normal growth.

The paper by four top U.S. economists, presented on Friday to a roomful of powerful central bankers in New York, argues the Fed would be wise to keep rates at rock bottom for longer than planned and then tighten monetary policy more aggressively.

Feb 27, 2015

Fed urged to wait before steeper U.S. rate hikes

NEW YORK (Reuters) – The Federal Reserve should keep interest rates at rock bottom for longer than planned and then tighten monetary policy more aggressively since there is little evidence that the U.S. economy has entered a new era of slower growth, according to findings by an influential group of economists.

The research paper, presented on Friday to a roomful of powerful central bankers in New York, concludes that the Fed cannot be certain to what level it should aim to ultimately raise its key rate. But this equilibrium level, they say, has not fallen as low as claimed by those who warn of a “secular stagnation” in the United States.

Feb 26, 2015

Fed’s Bullard warns over sharp ‘wake up’ call in markets

NEW YORK (Reuters) – Low-yielding bond markets could abruptly “wake up” and reprice for tighter U.S. monetary policy, posing problems for the Federal Reserve as it approaches an interest rate hike, a top Fed official said on Thursday.

St. Louis Fed President James Bullard said in an interview with Reuters that the longer the U.S. central bank keeps rates near zero amid such booming markets, the greater the risk of damaging asset-price bubbles over the next few years.

Feb 23, 2015

Local bankers emerge as Fed ally in fight against audit bill

COLUMBUS, Ohio (Reuters) – Local bankers are joining the
fight against a congressional proposal to audit the U.S. Federal
Reserve’s policy decisions, with more expected to lobby against
the bill if it gains traction in Washington.

The Audit the Fed bill, championed by Rand Paul of Kentucky,
a Republican Senator and likely presidential candidate, would
encourage interference from lawmakers into the central bank’s
monetary policy discussions. A similar Fed audit bill passed the
House of Representatives late last year and a hearing on Fed
transparency is expected to be formally called by the Senate
banking committee, according to people familiar with the matter.

Feb 23, 2015

Exclusive: Local bankers emerge as Fed ally in fight against audit bill

COLUMBUS, Ohio (Reuters) – Local bankers are joining the fight against a congressional proposal to audit the U.S. Federal Reserve’s policy decisions, with more expected to lobby against the bill if it gains traction in Washington.

The audit the Fed bill, championed by Rand Paul of Kentucky, a Republican Senator and likely presidential candidate, would encourage interference from lawmakers into the central bank’s monetary policy discussions. A similar Fed audit bill passed the House of Representatives late last year and a hearing on Fed transparency is expected to be formally called by the Senate banking committee, according to people familiar with the matter.