SAN FRANCISCO/NEW YORK (Reuters) – With the wind-down of the Federal Reserve’s massive bond buying under way, policymakers are beginning to discuss the next stage – when to allow the U.S. central bank’s swollen balance sheet to shrink.
If the Fed sticks to a plan laid out in June 2011, a decision to stop reinvesting bond proceeds would precede any increase in interest rates and mark the beginning of the Fed’s first tightening cycle since 2004-2006.
NEW YORK, April 3 (Reuters) – Federal Reserve Governor
Jeremy Stein, who has spearheaded the debate over whether
monetary policy should be used to combat asset bubbles, will
step down from the U.S. central bank on May 28 to return to his
teaching post at Harvard University.
The departure, announced on Thursday, will open up a second
vacancy on the normally seven-person Fed Board, assuming the
U.S. Senate soon approves three nominees awaiting confirmation.
LOUIS/MIAMI (Reuters) – Two top policymakers said on Wednesday the Federal Reserve was in no rush to raise interest rates and would have to see improvements in the U.S. economy to do so.
The comments from St. Louis Fed President James Bullard and Dennis Lockhart of the Atlanta Fed, though not ground breaking, did reinforce the notion that accommodative monetary policies would remain in place for a while to come despite intense market speculation over the timing of tightening.
CHICAGO (Reuters) – Federal Reserve Chair Janet Yellen said on Monday the U.S. central bank’s “extraordinary” commitment to boosting the economy, especially the still struggling labor market, will be needed for some time to come.
Yellen, in her first public speech since becoming Fed chair two months ago, strongly defended the Fed’s policies of low interest rates and continued bond-buying. Citing the struggles of three American workers as examples, she said there remains “considerable” slack in the economy and job market, a sign that further monetary stimulus can still be effective.
NEW YORK (Reuters) – While explicit policy coordination among the world’s central banks is unfeasible, a more effective system should be developed to ensure they have access to foreign currency reserves in times of stress, a top U.S. Federal Reserve official said on Thursday.
“Monetary policy meant to suit everybody is likely in the end to suit nobody,” William Dudley, the influential head of the New York Fed, said in a speech that pushed back against criticism that aggressive U.S. policy accommodation has recklessly hurt emerging-market economies.
(Reuters) – No single data point will determine when the Federal Reserve finally tightens its policy, a top U.S. central banker said on Thursday, reinforcing the notion stressed by Chair Janet Yellen that a “wide range” of factors would be considered.
Cleveland Fed President Sandra Pianalto, a voting member of the Fed’s monetary policy panel who is stepping down at the end of May, said in a speech that deflation remains a “big risk” for a U.S. economy that is nonetheless making some progress.
NEW YORK (Reuters) – The U.S. Federal Reserve’s committee of policy-setters has not yet decided to fully embrace a new test facility for so-called reverse repurchase agreements as a tool for conducting monetary policy in the future, Philadelphia Fed President Charles Plosser said on Tuesday.
Addressing the ongoing testing of the Fed’s reverse repo facility, Plosser stressed that the policy-setting Federal Open Market Committee, and not the New York Fed’s open markets desk, will make the final decision on whether to formally adopt the facility.
NEW YORK/SAN FRANCISCO (Reuters) – Top Federal Reserve officials rushed on Tuesday to clarify just when the U.S. central bank would finally tighten monetary policy after comments last week from Fed Chair Janet Yellen intensified a guessing game among investors.
Bonds dropped and some economists revised their predictions after a policy-setting meeting last week in which the Fed said it expected to keep interest rates near zero for a “considerable time” after it wraps up a bond-buying stimulus program, which is widely expected to end late this year.
NEW YORK (Reuters) – The Federal Reserve will keep interest rates near zero until it is confident the U.S. economic recovery has taken hold, a top Fed policymaker said in an interview on Tuesday, reinforcing the central bank’s view that there would be a “considerable time” between the end of bond-buying and a move to tighten policy.
“We will hold the base rate at a low range until we’re certain the recovery is well under way,” Richard Fisher, president of the Federal Reserve Bank of Dallas, told Reuters.
NEW YORK (Reuters) – A fresh Federal Reserve study highlights the inability of U.S. law to protect Americans from underwriting the risky activities of “too-big-to-fail” banks, a top Fed policymaker said on Tuesday.
Dallas Fed President Richard Fisher, who has long warned of the economic risks posed by massive banks, said in an interview the series of papers by New York Fed economists shows “it is improper to ask the taxpayer to underwrite the non-commercial banking operations of a complex bank holding company.”