Jonathan's Feed
Apr 6, 2015

Fed watching recent weakness; rate-hike timing unclear – Dudley

By Jonathan Spicer

NEWARK, N.J. (Reuters) – The timing of U.S. interest rate hikes are uncertain and the Federal Reserve must watch that the surprising recent weakness in the U.S. economy does not foreshadow a more substantial slowdown, an influential Fed official said on Monday.

New York Fed President William Dudley said the weak March jobs report released last Friday, as well as softer than expected manufacturing and retail sales in recent months, likely reflected “temporary factors to a significant degree,” including the harsh winter in much of the United States.

Mar 30, 2015

With blog, Bernanke has new platform to make old argument

By Jonathan Spicer

(Reuters) – Ben Bernanke launched a blog on Monday, giving the former Federal Reserve chairman a new pulpit from which to make an old argument: why interest rates need to be so low.

Bernanke, who handed the reins of the U.S. central bank to Janet Yellen last year, has been hitting the conference circuit more in recent months ahead of the planned publication of his book this autumn.

Mar 26, 2015

Insight – Fed market gurus prep rate hike amid last-minute anxieties

NEW YORK (Reuters) – The New York Federal Reserve officials tasked with prying interest rates off the floor have been meeting with bankers and traders to plot how best to do it, amid deep uncertainty over how much control they will really have over short-term lending markets.

With the U.S. central bank expected to raise rates later this year, Simon Potter and his team of market technicians have the tricky job of implementing higher rates using some new and lightly tested tools as well as some that may not work as well as in the past. They’ll be operating under intense global scrutiny that’s centred on the prospects for the world’s biggest economy.

Mar 26, 2015

Fed market gurus prep rate hike amid last-minute anxieties

NEW YORK, March 26 (Reuters) – The New York Federal Reserve
officials tasked with prying interest rates off the floor have
been meeting with bankers and traders to plot how best to do it,
amid deep uncertainty over how much control they will really
have over short-term lending markets.

With the U.S. central bank expected to raise rates later
this year, Simon Potter and his team of market technicians have
the tricky job of implementing higher rates using some new and
lightly tested tools as well as some that may not work as well
as in the past. They’ll be operating under intense global
scrutiny that’s centered on the prospects for the world’s
biggest economy.

Mar 23, 2015

Fed expected to hike this year, but future path uncertain: Fischer

NEW YORK (Reuters) – The Federal Reserve is “widely expected” to begin raising interest rates this year though the path remains uncertain, with policymakers deciding subsequent policy moves on a meeting-by-meeting basis, a top Fed official said on Monday.

Stanley Fischer, the Fed’s second-in-command, appeared to lay the groundwork for a less predictable future of monetary policy, where economic data and unexpected geo-political risks could prompt the Fed to raise, or lower rates on the run.

Mar 20, 2015

Fed handed record $96.9 bln profit to government last year

NEW YORK, March 20 (Reuters) – The Federal Reserve handed
$96.9 billion to the U.S. Treasury last year, audited financial
statements showed on Friday, a record payday for the U.S.
government thanks to interest on the central bank’s massive
stable of assets.

The interest in 2014 totaled $115.9 billion on the Treasury
and mortgage bonds the Fed has purchased over three rounds of
bond-buying, which were meant to stimulate the U.S. recovery
from a 2007-2009 recession. The Fed’s 12 reserve banks held $4.5
trillion at year end, up $500 billion from 2013.

Mar 18, 2015

Fed bows to market’s more dovish view of soaring dollar

NEW YORK/SAN FRANCISCO (Reuters) – The Federal Reserve’s back-pedaling on how aggressively it plans to raise interest rates acknowledges that the more dovish financial markets were right all along: turns out, the soaring dollar has stalled its policy-tightening plan.

The U.S. central bank’s far more modest inflation predictions, released on Wednesday, suggest that the strong currency and sagging oil prices are spooking policymakers more than they have let on. It sets the stage for later rate hikes than they expected, but which many investors have long anticipated.

Mar 6, 2015

Jobs report clears way for Fed to flag June rate hike

NEW YORK, March 6 (Reuters) – America’s tumbling
unemployment rate and better-than-expected job gains in February
should give Federal Reserve officials confidence to pave the way
this month, though not commit, to an interest rate hike in June.

Data released Friday showed that unemployment dropped to a
six-year low of 5.5 percent last month, within the range the Fed
considers to be full employment, suggesting that winter weather
does not appear to be derailing the economy as it did last year.

Mar 5, 2015

Missteps, consolidation eroded New York Fed authority over banks

NEW YORK (Reuters) – The New York Federal Reserve’s once-unparalleled authority to oversee Wall Street has been weakened by a series of supervisory missteps and by a consolidation of power at the U.S. central bank’s Washington headquarters.

Current and former New York Fed employees say its ability to independently regulate the country’s largest banks began to deteriorate after the financial crisis, and got worse once U.S. Congress passed its landmark Dodd-Frank reform bill, prompting the Washington-based Federal Reserve Board of Governors to take a more active role.

Mar 4, 2015
via MacroScope

Prescient Yellen saw limits of zero Fed interest rates back in 2009

Photo

Despite the Federal Reserve’s trillions of dollars in newly printed money, workers’ wages and overall U.S. inflation have failed to take off since the recession. Longer-term borrowing costs, from 10-year Treasury yields to 30-year home mortgages, have also compressed without any real signs of reversing. While this has perplexed many economists, transcripts of the U.S. central bank’s crisis-fighting meetings in 2009 show that Janet Yellen, then the head of the San Francisco Fed, was prescient in warning colleagues of these very problems.

“The bottom line is that we are faced with a situation in which inflation is undesirably low, and, even with large monthly employment gains, the level of resource slack will remain high for an extended period,” she said at a meeting in December of that year, when unemployment was nearly 10 percent and inflation was near zero. “In my forecast, the zero bound (for the Fed’s key interest rate) and the limits on unconventional policy constrain us from pursuing a more desirable and more expansionary policy for some time to come.”