Federal Reserve officials have largely acknowledged by now that leading markets to believe the central bank would reduce its bond buying stimulus in September and then failing to do so was a communications blunder.
For Zach Pandl, a former Goldman economist now at Columbia Management, this means the Fed may have to reshape its guidance to financial markets – even if the exact contours of the changes remain unclear.
, Oct 8 (Reuters) – The Federal Reserve should
start reducing its asset purchase stimulus program as soon as
possible given that economic growth is already firm and will
become stronger next year, a top Fed official said on Tuesday.
Charles Plosser, president of the Philadelphia Fed, told a
local chamber of commerce meeting that he disagreed with the
central bank’s decision last month to hold off on reducing the
$85 billion current monthly pace of bond-buying.
BALTIMORE (Reuters) – The Federal Reserve could reduce the pace of its bond-buying stimulus despite a government shutdown that is preventing the release of key economic data, Richmond Fed President Jeffrey Lacker said on Friday.
He was speaking even as the Labor Department failed to release its monthly jobs report, the most widely watched global indicator, because of cost cuts related to the budget impasse and shuttering of government.
Now that Washington’s circus-like government shutdown has put a damper on hopes for stronger U.S. economic growth going into next year, dovish Federal Reserve officials again appear to have the upper hand in the way of policy commentary.
Take Eric Rosengren, the Boston Fed President who had been unusually quiet as the tapering debate gathered steam. In a speech in Vermont on Thursday, he returned to a familiar theme – the central bank still has plenty of firepower and should not be afraid to use it.
BUENOS AIRES, Oct 3 (Reuters) – A spike in shipping costs
and lower profits resulting from a series of union protests at
Argentina’s Rosario port, one of the world’s biggest grain
export centers, has raised concerns among the country’s
Strikes by powerful unions representing river pilots,
longshoremen and soy crushing workers have been frequent at the
port, about 300 kilometers (200 miles) north of Buenos Aires,
where some of the world’s top grain traders – such as Cargill
, Bunge and Louis Dreyfus – operate.
You have to give Federal Reserve Chairman Ben Bernanke credit for standing his ground on data-dependence. Despite widespread suspicions, including on this blog, that the central bank would begin reducing the pace of its bond-buying stimulus in September simply because the markets were expecting it, the Fed chose to hold off in the face of a still-fragile economy.
Here’s how Bernanke addressed the issue of the market’s surprise at the Fed’s decision at his press conference:
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.
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.
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.
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.