Chief Correspondent, Hong Kong
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Jul 3, 2014

Bullish US June jobs report prompts economists to eye earlier rate hike

WASHINGTON, July 3 (Reuters) – A bullish U.S. jobs report
prompted several economists to toy with the idea of bringing
forward their forecasts for a Federal Reserve interest rate
hike, although most held firm, preferring to wait for more data.

Interest rate futures showed traders ramping up bets
slightly that the U.S. central bank will lift rates in June of
next year. The probability of a June rate hike implied by rate
futures rose to 58 percent from 51 percent before the data.

Jul 2, 2014

Yellen drives wedge between monetary policy, financial bubbles

WASHINGTON (Reuters) – Monetary policy faces “significant limitations” as a tool to counter financial stability risks, Federal Reserve Chair Janet Yellen said on Wednesday, adding that heading off the U.S. housing bubble with higher interest rates would have caused major economic damage.Weighing in on a global debate, Yellen reiterated her view that regulation – not rate policy – needs to play the lead role in combating excessive financial risk-taking.

“The potential cost … is likely to be too great to give financial stability risks a central role in monetary policy discussions,” Yellen said at an event sponsored by the International Monetary Fund.

Jul 2, 2014

Monetary policy not best financial stability tool: Yellen

WASHINGTON (Reuters) – Monetary policy faces “significant limitations” as a tool to address financial stability risks, and would have caused major economic damage if it had been used to head off the U.S. housing bubble, Federal Reserve Chair Janet Yellen said on Wednesday. Weighing in a global central banking debate, Yellen reiterated her view that regulatory policy needs to play the lead role in combating excessive financial risk-taking.

She said, however, that an increased focus on financial stability in monetary policy deliberations was appropriate, but that central banks should only shift interest rates to combat risks to stability in rare circumstances.

Jun 26, 2014

Fed’s Lacker says U.S. jobless rate accurate gauge of labor slack

, June 26 (Reuters) – The U.S. jobless rate is
likely giving an accurate read on the amount of slack in the
labor market, with an unusually high level of long-term
unemployment reflecting those who lack skills needed to find
work, a top Federal Reserve official said on Thursday.

Richmond Federal Reserve Bank President Jeffrey Lacker told
a group of local business leaders a drop in labor force
participation and historically high long-term unemployment
largely reflected structural trends that monetary policy cannot
offset.

Jun 10, 2014

Fischer, two other Fed nominees advance in Senate

WASHINGTON (Reuters) – Stanley Fischer’s nomination to be vice chairman of the U.S. Federal Reserve advanced in the Senate on Tuesday, along with two other nominees to the U.S. central bank, setting the table for their expected confirmation later this week.

The former governor of the Bank of Israel, who was separately confirmed to a Fed board seat last month, is widely expected to win approval for a concurrent four-year term as the Fed’s No. 2 when the Senate votes on Thursday.

Jun 3, 2014

Fed’s George urges halt to bond reinvestment before rate hike

WASHINGTON (Reuters) – The Federal Reserve should let its balance sheet begin shrinking before raising interest rates, Kansas City Federal Reserve President Esther George said on Tuesday in remarks that highlight divisions over how to wind down years of crisis response.

The Fed is on pace to end monthly asset purchases by October or December. In a speech prepared for delivery in Colorado, George said that once that happens, and before the Fed begins raising interest rates, the central bank should also stop reinvesting the proceeds as its $4 trillion in holdings of U.S. Treasury and other securities mature.

May 21, 2014

Fed begins policy exit talks, split on view of U.S. job market

WASHINGTON, May 21 (Reuters) – Federal Reserve policymakers
last month began laying groundwork for an eventual retreat from
easy monetary policy with a discussion of how to best control
interest rates as they remove trillions of dollars from the
financial system.

No final decisions were taken, and minutes of the session,
released on Wednesday, said the Fed was merely engaged in
“prudent planning” and not signaling it was ready to “normalize”
monetary policy or raise interest rates any time soon.

May 20, 2014

Fed’s Dudley sees ‘relatively slow’ rate hike cycle

NEW YORK (Reuters) – The Federal Reserve should be able to raise interest rates slowly when it eventually tightens monetary policy given that slack in the U.S. economy is restraining inflation, a top official at the central bank said on Tuesday.

New York Federal Reserve President William Dudley said the economy was poised for stronger growth and inflation should “drift upwards” towards the Fed’s 2 percent goal. But a swift climb in inflation was unlikely, he said.

May 19, 2014

Fischer, Brainard to push for more activist Fed

WASHINGTON, May 19 (Reuters) – The two new nominees to the
Federal Reserve’s Board of Governors are expected to push for an
expanded Fed role in managing the U.S. economy, working to
replace the current raft of programs that resulted from the
financial crisis with more permanent tools.

The arrival of former Bank of Israel Governor Stanley
Fischer and former U.S. Treasury official Lael Brainard will add
two strong voices to back Chair Janet Yellen’s view that loose
monetary policy needs to be extended to turn around a slack
labor market.

May 7, 2014

Yellen says U.S. economy still needs help, housing poses risk

WASHINGTON (Reuters) – Federal Reserve Chair Janet Yellen said on Wednesday the U.S. economy was still in need of lots of support given the “considerable slack” in the labor market, adding that the housing sector’s weakness and geopolitical tensions posed risks.

Even as she took note of “appreciable” improvements in the jobs market, Yellen told a congressional committee a high rate of long-term unemployment and a slow rise in worker pay suggested plenty of room for further job gains.

    • About Michael

      "In June 2009, Michael Flaherty became a Chief Correspondent for Reuters News, leading a team of journalists who cover investment banking, mergers & acquisitions, private equity and hedge funds, equity capital markets, natural resources and property across Asia. He arrived in Hong Kong in Feb. 2008 as Reuters' Asia Financial Services correspondent, covering the investment banks and M&A. Flaherty was hired by Reuters in New York in Dec. 2003. He was voted Reuters Journalist of the Year for his 2007 coverage of the U.S. private equity boom and bust. He started at Reuters with the consumer group covering office retailers ..."
      Joined Reuters:
      Dec. 1, 2003
      Awards:
      Peninsula Press Club, 2002, Reuters Journalist of the Year, 2007, M&A International, 2007
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