WASHINGTON, April 4 (Reuters) – Hedge fund and derivative
investors are taking on more risk as aggressive monetary easing
and an improving economy boost demand for higher-yielding
securities, a Federal Reserve survey showed on Thursday.
The Fed’s Senior Credit Officer Survey, which supplements
data on the banking sector with some insights into activity in
funding markets for asset-backed securities and over-the-counter
derivatives, showed one in four respondents reported an increase
in hedge fund leverage, or debt used to make financial bets.
BIRMINGHAM, Alabama (Reuters) – The Federal Reserve may be able to reduce its bond-buying stimulus plan before the end of this year if economic growth continues to pick up and employment improves further, a top central bank official said.
Dennis Lockhart, president of the Atlanta Fed, said on Tuesday he expects the economy to expand a bit over 2 percent this year, though he does see some chance that the expansion could prove even stronger.
The Great Recession set the U.S. labor market so far back that there is still a long way to go before policymakers can claim victory and point to a true return to healthy conditions, a top former Fed economist said. The U.S. economy remains around 3 million jobs short of its pre-recession levels, and that’s without accounting for population growth.
“The goal line is still a long ways off,” David Stockton, former head of economic research at theU.S.central bank’s powerful Washington-based board, told an event sponsored by the Peterson Institute for International Economics. He sees the American economy improving this year, but believes the recovery will continue to have its ups and downs.
The problem of a “democratic deficit” that might arise from the process of European integration has always been high on policymakers’ minds. The term even has its own Wikipedia entry.
As Cypriots waited patiently in line for banks to reopen after being shuttered for two weeks, the issue was brought to light with particular clarity, since the country’s bailout is widely seen as being imposed on it by richer, more powerful states, particularly Germany.
Ask top Federal Reserve officials about adopting a target for non-inflation adjusted growth, or nominal GDP, and they will generally wince. Proponents of the awkwardly-named NGDP-targeting approach say it would be a more powerful weapon than the central bank’s current approach in getting the U.S.economy out of a prolonged rut.
This is what Fed Chairman Ben Bernanke had to say when asked about it at a press conference in November 2011:
WASHINGTON (Reuters) – Federal Reserve Chairman Ben Bernanke on Monday defended the central bank’s aggressive easing of monetary policy, saying while it was aimed at bolstering the economic recovery, it was helping other countries as well.
The Fed’s asset-purchase programs, aimed at keeping long-term borrowing costs down and spurring investment, have been criticized overseas for their adverse impact on emerging market currencies.
I asked Fed Chairman Ben Bernanke during his quarterly press conference this week if the central bank had its own estimate for the implicit subsidy that banks considered too big to fail receive in the form of cheaper borrowing. Senator Elizabeth Warren had confronted him at a recent hearing with a Bloomberg estimate of $83 billion which itself was derived from an IMF study. At the time, he dismissed her concern: “That’s one study Senator, you don’t know if that’s an accurate number.”
At the press briefing, Bernanke said the Fed does not have its own figures for Wall Street’s too-big-to-fail subsidy, in part because there were too many factors that made it difficult to calculate.
WASHINGTON (Reuters) – Too much of the recent growth in employment has been concentrated in low-wage and temporary jobs, leaving the recovery on shaky ground, a top Federal Reserve official said on Friday.
Sarah Raskin, a member of the Fed’s board of governors, said monetary policymakers are doing all they can to promote stronger economic growth and beef up hiring, and cited improving labor market conditions. But she added interest rates are a blunt tool that cannot help direct the types of jobs that are created, noting one quarter of workers are now considered low-wage.
It’s had a good run, and will remain in use for the purposes of alerting reporters that “Treasury is in the (press) room.” But when it comes to the Federal Reserve’s monetary policy decisions, which are also released out of Treasury, the central bank is ditching the old ringer.
Until the last FOMC decision, reporters would be guided by a 10 second countdown followed by a loud clinging of the bell pictured above. Now, news agencies will report the news at the set time of 2 pm – so there’s no wiggle room in the hyper competitive world of microsecond timings that give robot-traders an edge.
WASHINGTON (Reuters) – The Federal Reserve looks set to sustain its $85 billion monthly bond-buying stimulus despite improving U.S. economic data as a new flare-up in the euro zone crisis reminds officials of a risky global environment.
As it wraps up a two-day meeting on Wednesday, the U.S. central bank’s policy-setting Federal Open Market Committee will continue debating the potential costs of quantitative easing, including the possibility its easy money policies will inflate asset market bubbles.