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Sep 26, 2013

Lacker says Fed’s guidance on rates could hurt U.S. growth

WASHINGTON (Reuters) – The Federal Reserve’s effort to assure the public that interest rates will remain near zero for years could have the perverse effect of hurting confidence and damaging economic growth, a top Fed official said on Thursday.

Jeffrey Lacker, president of the Richmond Fed, offered a conference in Stockholm a taste of his hawkish skepticism of the U.S. central bank’s unconventional monetary policies.

Sep 19, 2013

Ground control, we have a Fed communications problem

WASHINGTON (Reuters) – For a central bank that prides itself on transparent communications, the U.S. Federal Reserve has a clear messaging problem.

After months conditioning financial markets for a likely September start to a reduction in stimulus, the Fed’s inaction this week stunned investors, leaving many wondering how much stock they can put on the verbal nods of policymakers.

Sep 18, 2013
via MacroScope

A market-dependent Fed?

It’s hard to shake the feeling that the Federal Reserve is about to begin pulling back on stimulus not just on the back of better economic data, but also because financial markets have already priced it in. The band-aid ripping debate over an eventual tapering of bond purchases that started in May was so painful, Fed officials simply don’t want to go through it again.

If anything, recent data have been at best mixed, at worst worrisome. In particular, August job growth was disappointing and labor force participation declined further.At the same time, inflation remains well below the central bank’s objective.

Sep 13, 2013
via MacroScope

Fed doves becoming an endangered species

 

It’s official: Instead of policy doves on the U.S. central bank’s Federal Open Market Committee, there are now only “non-hawks.” A research note from Thomas Lam at OSK-DMG used the term in referring to recent remarks from once more dovish officials like Charles Evans of the Chicago Fed and San Francisco Fed President John Williams.

The implied message from the latest Fed comments (or reticence), namely from the non-hawks, is that policymakers are clearly assessing a broader spectrum of considerations – beyond data-dependence – when mulling over the prospect of tapering in September.

Sep 6, 2013
via MacroScope

If at first you don’t succeed… Fed’s Evans sticks to strong forecast despite misses

It’s nice to know Federal Reserve officials have a sense of humor about their own forecasting errors. Chicago Fed President Charles Evans was certainly humble enough to admit to some recent misses in a speech on Friday .

Still, he’s sticking to his guns, arguing that U.S. economic growth will finally break above 3 percent next year, allowing the Fed to gradually pull back on its bond-buying stimulus.

Sep 6, 2013

U.S. Fed can soon begin reducing stimulus, Evans says

, Sept 6 (Reuters) – The U.S. Federal
Reserve can begin winding down its bond-buying stimulus later
this year, Chicago Fed President Charles Evans said on Friday,
adding he was still unsure about whether to start in September.

A U.S. employment report earlier on Friday showing
relatively weak job gains but a drop in the jobless rate in
August was just mixed enough to leave uncertain the prospect of
a reduction in the Fed’s $85 billion monthly asset purchases.

Sep 6, 2013

Fed can start tapering ‘later this year,’ says Evans

GREENVILLE, South Carolina (Reuters) – The U.S. Federal Reserve can begin winding down its bond-buying stimulus later this year as the economy improves, but will likely need to keep official interest rates near zero for another two years, Chicago Fed President Charles Evans said on Friday.

While Evans did not specify an exact month for the start of a reduction in the Fed’s purchases of mortgage and Treasury bonds, his timeline appears to make him reticent about making such a move in September, as most investors now expect.

Sep 6, 2013

U.S. Fed can start tapering ‘later this year,’ says Evans

, Sept 6 (Reuters) – The U.S. Federal
Reserve can begin winding down its bond-buying stimulus later
this year as the economy improves, but will likely need to keep
official interest rates near zero for another two years, Chicago
Fed President Charles Evans said on Friday.

While Evans did not specify an exact month for the start of
a reduction in the Fed’s purchases of mortgage and Treasury
bonds, his timeline appears to make him reticent about making
such a move in September, as most investors now expect.

Sep 5, 2013
via MacroScope

Say it with confidence: Consumer surveys as a leading indicator of jobs

It turns out people are better employment forecasters than economists. A report from New York Fed economists finds that confidence measures gleaned from consumer surveys are very tightly correlated with the path of U.S. employment.

The paper offers some illustrative charts that make a rather convincing case.

The chart below plots the Present Situation Index against the unemployment rate, whose scale is inverted so that high levels represent strong labor market conditions (low unemployment) and vice versa. One readily apparent feature is that the two series move together very closely throughout the period and, most notably, during all five of the recessions since 1977. It’s hard to tell from inspecting the chart, but the highest correlation (0.89) occurs at a two-month lead; that is, the Present Situation Index is even more strongly correlated with the unemployment rate two months into the future than it is with the concurrent rate.

Sep 4, 2013

U.S. economy growing at ‘modest to moderate’ pace: Fed

WASHINGTON (Reuters) – The U.S. economy expanded at a “modest to moderate” pace in most of the country between early July and late August, according to a Federal Reserve report that was just strong enough to reinforce the prospect of a pullback in monetary stimulus.

With most Fed officials seemingly bent on moving away from controversial asset purchases aimed at keeping long-term rates down, investors are expecting the Fed to begin reducing the pace of its $85 billion monthly bond buys at policymakers’ next meeting later this month.

    • About Pedro

      "Pedro da Costa has been covering economics and financial markets since 2001. He is currently based in Washington and focuses on the Federal Reserve and macroeconomic policy. Da Costa earned a Master's in international relations at the University of California San Diego and studied sociology and political science as an undergraduate at the University of Chicago and the London School of Economics. He grew up in Rio de Janeiro, Brazil."
      Joined Reuters:
      2001
      Languages:
      English, Portuguese, Spanish, French
      Awards:
      2011 Deadline Club Award from the Society of Professional Journalists' New York Chapter
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