No, really: look to economists for nuance on Fed’s decision-making

October 29, 2015

U.S. Federal Reserve Chair Yellen testifies before a House Financial Services Committee hearing on Capitol Hill in WashingtonFor all of the incessant talk from market trading desks on how economic forecasters are hopelessly off track on just about everything, their collective thinking on the subtleties of Fed policy near a potentially historic turning point has been well worth listening to.

U.S. job market growth: all work and still little pay

October 1, 2015

We have already heard enough commentators and economists explain how U.S. payrolls data will not matter much in coming months because we’re at a solid enough pace of hiring to keep the unemployment rate, already at just 5.1 percent, on a steady downward path.

from Ann Saphir:

To boldly go where no central banker has gone before

October 1, 2015

John Williams, chief of the San Francisco Federal Reserve Bank, happens to have the same name as the guy who wrote the music for the Star Wars films. Judging from his speeches of late, the Fed’s own Williams is something of a sci-fan himself.  Thursday in Salt Lake City he borrowed from the iconic greeting of Star Trek’s Spock with a talk titled “The Economic Outlook: Live long and Prosper.” Earlier this month he riffed on Star Wars, with a speech subtitled “May the (economic) force be with you.” In July, he spoke about “The recovery’s final frontier” (see http://www.imdb.com/title/tt0098382/). So it is quite logical that the enterprising captain of the Fed’s farthest-flung Western outpost would be keen on exploring strange new worlds. And here I don’t just mean voyaging to Los Angeles, where he was on Monday, or to Spokane, Wash., where he treks next week. Williams, like most Fed officials, believes that after nearly seven years of extraordinarily easy monetary policy, the U.S. economy is finally ready to leave near-zero interest rates behind. On Thursday, Williams repeated his view that the Fed should raise interest rates this year. Not all U.S. central bankers agree – one can almost hear Minneapolis Fed’s Kocherlakota or Chicago Fed’s Evans echoing Princess Leia’s warning, “I have a bad feeling about this.” Certainly, if the Fed can successfully raise rates without quickly needing to cut them again, it will have pulled off what several other global central banks – the European Central Bank, the Bank of Japan, Sweden’s Riksbank --  have tried to do, but failed. Raising rates this year, as Williams hopes and expects to, would indeed be a bold move; and if the first hike is followed by others, he would indeed be taking the Fed where no other central bank has gone before.

U.S. manufacturing flashing warning signs

September 29, 2015

U.S. manufacturing may be in trouble. Nearly all key indicators measuring the health of manufacturers in the world’s largest economy have disappointed over the past year.

Fear could lead Fed into a much more fearsome trap

September 18, 2015

Delaying its first rate hike in nearly a decade after taking a pass in June and July means the U.S. central bank may have stepped further away from an escape from zero rates and $3.7 trillion of asset purchases bloating its balance sheet.

Rate hikes are coming… in Latin America

September 17, 2015

Federal Reserve Board Chair Janet Yellen prepares to testify before a House Financial Services committee hearing on Capitol Hill at in Washington

Latin American central banks are watching today’s Federal Reserve meeting very closely. Some are ready to raise their own interest rates, even if Yellen does not pull the trigger now.

Inflation may still be far off target, but rates will soon be rising

September 15, 2015

USA/Inflation may be far off target but economists are convinced the United States Federal Reserve and the Bank of England will soon begin raising rates from near zero – with the Fed poised to act as soon as Thursday.

On non-farm payrolls day, pay attention to pay

September 2, 2015

A pedestrian passes a pawnbroker offering 'payday advances' in Crawley, southern EnglandA lot is riding on the August U.S. jobs report – a good chunk of justification for the first Federal Reserve interest rate rise in nearly a decade and a lot of face-saving at the world’s most powerful central bank.

Tale of two ISMs: another reason for the Fed to pause?

September 1, 2015

Depending on which report you read from the same source, the U.S. economy is doing extremely well and also in danger of slowing sharply.