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Dec 5, 2014

Fed needs to acknowledge rate hikes are coming: Mester

WASHINGTON (Reuters) – The Federal Reserve needs to adjust its policy statement to acknowledge clear signs of economic strength and, in particular, stop telling the world that interest rates won’t rise for a long while yet, a top Fed official said in an interview on Friday.

Cleveland Fed President Loretta Mester told Reuters she is more optimistic about the economy than most of her colleagues at the U.S. central bank, and would probably be willing to tighten monetary policy sooner. But as the Fed approaches a key policy meeting on Dec. 16-17, she has not decided whether to dissent if the message remains too dovish for her taste.

Dec 1, 2014

Fed welcomes energy drop, shrugs off disinflation threat

NEW YORK (Reuters) – The Federal Reserve is welcoming the sharp drop in global energy prices, with two influential policymakers on Monday cheering the boost it should provide American pocketbooks and shrugging off any pressure on already low inflation.

Soft oil prices in particular, which hit a five-year low on Friday, will only temporarily dampen overall U.S. prices, Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley said at separate events. The pair painted a mostly rosy outlook for the world’s largest economy, suggesting the central bank is not letting energy markets distract it from lifting rates some time next year.

Dec 1, 2014

Fed rate hikes to depend on markets, not just economy -Dudley

NEW YORK, Dec 1 (Reuters) – The Federal Reserve will not
just tighten policy based on how the U.S. economy is faring, but
on how well financial markets respond to the eventual
interest-rate hikes, an influential Fed official said on Monday.

New York Fed President William Dudley said the U.S. central
bank will unleash more aggressive rate rises if financial
markets do not tighten as expected, and vice versa. He flagged
short- and long-term interest rates, equities, credit spread and
availability, and the dollar as areas the Fed will watch.

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.