Fed extends low-rate vow in bid to help economy
WASHINGTON (Reuters) – The Federal Reserve on Wednesday said it will likely not raise interest rates until at least late 2014, much later than it had said previously, as it nurses a still-sluggish economic recovery.
The Fed, after a two-day policy meeting, repeated its view that the economy faces “significant downside risks” but if offered little to suggest it was close to launching another round of bond-buying to prop up growth.
Fed treads new path with housing push
WASHINGTON (Reuters) – The Federal Reserve has launched a potentially controversial push to revive the battered U.S. housing market, calling on other government officials to act after largely exhausting its own tools to support the fragile economic recovery.
After the Fed slashed interest rates to near zero more than three years ago and amassed $2.3 trillion in bonds to spur growth, the U.S. economy showed some momentum toward the end of 2011. But many analysts are doubtful the recovery will achieve take-off velocity in 2012 and housing is one of the biggest drags.
Bernanke near inflation target prize, but jobs a concern
WASHINGTON (Reuters) – The Federal Reserve could take the historic step this week of announcing an explicit target for inflation, a move that would fulfill a multi-year quest of the central bank’s chairman, Ben Bernanke.
An inflation target would be the capstone of Bernanke’s crusade to improve the Fed’s communications, an initiative aimed at making the central bank more effective at controlling growth and inflation. It would, at long last, bring the Fed into line with a policy framework used by most other major central banks.
Fed officials say not time to buy bonds now
LOUIS (Reuters) – Two top Federal Reserve officials, including a policy centrist, said on Friday the central bank should hold off buying more bonds to boost growth given a strengthening in the economy.
“The data has been stronger in recent weeks and months, and so I think there’s probably a good case to stand pat for now,” St. Louis Federal Reserve Bank President James Bullard told reporters after a speech here.
Fed treads new path with US housing push
WASHINGTON, Jan 9 (Reuters) – The Federal Reserve has
launched a potentially controversial push to revive the battered
U.S. housing market, calling on other government officials to
act after largely exhausting its own tools to support the
fragile economic recovery.
After the Fed slashed interest rates to near zero more than
three years ago and amassed $2.3 trillion in bonds to spur
growth, the U.S. economy showed some momentum toward the end of
2011. But many analysts are doubtful the recovery will achieve
take-off velocity in 2012 and housing is one of the biggest
drags.
Strong data damps Fed need to buy bonds: Bullard
CHICAGO (Reuters) – Signs the U.S. recovery is gaining strength suggest the Federal Reserve may not need to buy any more bonds to spur growth, a top policymaker said on Saturday.
“I don’t think it’s very likely right now because the tone of the data has been pretty strong” through the end of 2011 and up to now, St. Louis Fed President James Bullard told reporters after a speech at an economics conference. “We can probably wait and see for now.”
World Bank to recommend China financial reforms
CHICAGO (Reuters) – The World Bank will recommend reforms to China’s domestic financial system as part of broader proposals to help wean the country from a dependence on exports to sustain economic growth, World Bank President Robert Zoellick said on Saturday.
Those changes could have the benefit of increasing confidence among Chinese authorities that the nation’s economy will not be destabilized by foreign exchange reforms, Zoellick said. U.S. and other international authorities have long urged China to let its yuan currency, also called the renminbi, to float more freely on foreign exchange markets.
Two cheers for financial innovation
Protests against Wall Street and the U.S. financial system are hanging over an annual gathering of economists and social scientists in Chicago. Yale economist Robert Shiller offered two cheers for capitalist finance, saying that while the U.S. free market system has contributed to higher living standards, the vehemence of the recent public outcry points to a need for greater democratization. This is how he put it in a speech:
Occupy Wall Street … was something that in some sense you could see coming. I think we have increasing concerns about inequality, which is getting worse, about the distribution of power.
Fed says expand Fannie, Freddie role to aid housing
WASHINGTON (Reuters) – The U.S. government-run mortgage finance firms Fannie Mae and Freddie Mac could play a bigger role in turning around the battered U.S. housing market, the Federal Reserve told Congress, a call that looks set to run into stiff political opposition.
The Fed, in a paper sent to lawmakers on Wednesday, outlined an array of steps that could be taken to help the housing sector, including allowing Fannie and Freddie to provide cheaper mortgages to a broader pool of homeowners.
Fed to publish rate path forecasts in new transparency
WASHINGTON (Reuters) – The Federal Reserve on Tuesday said it would begin publishing forecasts on the path of interest rates later this month, a significant milestone in Ben Bernanke’s push for greater policymaking transparency.
The move is meant to better align bets in financial markets with the views of policymakers at the central bank, and it could show that rates will be on hold for longer than previously expected.
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