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Oct 18, 2012
via MacroScope

Could renewed U.S. economic strength turn the fiscal cliff into a fiscal ramp?

The term ‘fiscal cliff’ has now safely transitioned from economic jargon to popular cliché. But how worried should Americans be about the growth-stunting mélange of expiring tax cuts and spending reductions set to begin kicking in at the start of next year?

Economists widely believe that if Congress fails to come to some sort of agreement on the budget, the U.S. economy would plunge into a deep recession. RBS economist Michelle Girard, however, thinks a recent pick up in U.S. economic activity could offset some of the cliff-related weakness.

Oct 17, 2012
via MacroScope

Banks keeping most of QE3 benefits for themselves

Federal Reserve officials have been worried that their policy of ultra-low interest rates may be having less of an effect than usual because of a “broken transmission channel.” In plain English, this means the money hasn’t really been flowing smoothly from liquidity-flooded banks to would-be borrowers.

Economists at TD Securities argue banks have passed on less than half of their lower funding rates as reflected in yields on mortgage-backed securities onto consumers.

Oct 15, 2012
via MacroScope

Why QE3 isn’t just for the 1 percent

During a Q&A at the Brookings Institution last week, former Fed Vice Chairman Donald Kohn asked new board member Jeremy Stein, formerly a Harvard professor, about the impression that the Fed’s quantitative easing was only helping wealthy people who benefit most from rising stocks.

“How do you deal with this sense that the effects of policy aren’t being equitably felt in all parts of society,” asked Kohn, who worked at the Fed for four decades before stepping down in 2010, and is now a Brookings Fellow.

Oct 15, 2012

Lacker says Fed shouldn’t overdo stimulus

ROANOKE, Virginia (Reuters) – The Federal Reserve’s latest monetary stimulus risks unwanted inflation and will not do much for economic growth, Richmond Fed President Jeffrey Lacker said on Monday.

Lacker, an inflation hawk who has dissented at every policy meeting this year, said a troubled U.S. labor market was being dampened by factors outside the control of Fed officials.

Oct 14, 2012

Federal Reserve’s Bernanke says U.S. stimulus also a boon for global growth

WASHINGTON (Reuters) – Federal Reserve Chairman Ben Bernanke on Sunday denied the U.S. central bank’s highly stimulative monetary policy hurts emerging economies, saying stronger growth in the United States bolsters global prospects as well.

Bernanke has often defended Fed actions against domestic critics, who argue the policy of keeping interest rates near zero while ramping up asset purchases hurts savers and risks future inflation.

Oct 12, 2012

Lacker says Fed stimulus will do little for economy

WASHINGTON (Reuters) – The Federal Reserve’s new round of monetary stimulus is unlikely to do much for economic growth without a damaging rise in inflation, Richmond Fed Bank President Jeffrey Lacker said on Friday.

Lacker, an inflation hawk and the lone dissenter on this year’s Federal Open Market Committee, said he opposed the announcement in September of an open-ended bond-buying program targeting $40 billion in mortgage securities per month.

Oct 11, 2012
via MacroScope

Too big to exist? Fed’s regulation czar backs limits on bank size

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Regional Federal Reserve Bank presidents who oppose quantitative easing have made little way in convincing the central bank’s dovish core. Apparently, not so on the cause célèbre of policymakers like Richard Fisher at the Dallas Fed, who have called for too big to fail banks to be broken up.

In a speech this week, Fed board governor and regulation czar Daniel Tarullo stopped short of calling for outright break-ups. But he did take the unprecedented step of backing size limitations on banks that would be linked to overall U.S. economic output.

Oct 11, 2012

Fed’s Stein says firmly backs QE3, low rates pledge

WASHINGTON, Oct 11 (Reuters) – U.S. unemployment remains
“painfully high” while inflation is not an immediate concern,
giving the Federal Reserve plenty of reason to launch a new
stimulus last month, a top Fed official said on Thursday.

Jeremy Stein, in his first keynote speech since becoming a
Fed governor in May, said he strongly supported the U.S. central
bank’s decision to embark on a new, open-ended bond-buying
program.

Oct 11, 2012

Fed’s Stein says firmly behind latest stimulus

WASHINGTON (Reuters) – U.S. unemployment remains “painfully high” while inflation is not an immediate concern, giving the Federal Reserve plenty of reason to launch a new stimulus last month, a top Fed official said.

Jeremy Stein, in his first keynote speech since becoming a Fed governor in May, said he strongly supported the central bank’s decision to embark on a new, open-ended bond buying program.

Oct 11, 2012

Fed’s Yellen says Europe, housing strains stifling U.S. recovery

WASHINGTON (Reuters) – The U.S. economic recovery continues to be hampered by spillover effects of the European crisis and a downtrodden housing market, Federal Reserve Vice Chair Janet Yellen said on Thursday.

Yellen, Fed Chairman Ben Bernanke’s influential no. 2 at the central bank’s board, said the world’s major economies were all slow to mend from the massive shock of the financial crisis and recession of 2007-2009.

    • 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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