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Apr 16, 2012

Preview: Fed tries to steer clear of controversial bond buys

WASHINGTON (Reuters) – The U.S. Federal Reserve is independent but it does not exist in a vacuum, as waning appetite at the central bank for contentious bond purchases suggests.

Minutes from the Fed’s March meeting released this month showed support thinning for further bond purchases. Officials are unlikely to develop any more appetite for them by their meeting next week, despite disappointing March jobs figures.

Apr 12, 2012

Economy would likely have to worsen for Fed to act

WASHINGTON (Reuters) – U.S. Federal Reserve officials, out on a speaking spree on Thursday, suggested the economy would have to deteriorate for the central bank to consider additional monetary stimulus.

Policymakers did hint at the possibility of further action, with Fed Board Governor Sarah Raskin saying the Fed stands ready to do all it can to support the economic rebound, while New York Fed President William Dudley emphasized the recovery’s fragility.

Apr 12, 2012
via MacroScope

Federal Open Mouth Committee – Today’s lengthy list of Fed speakers

Thursday, April 12

SYRACUSE, N.Y. – Federal Reserve Bank of New York President William Dudley speaks on regional and national economic conditions before the Center for Economic Development, 0715 EDT/1115 GMT. Audience Q&A expected.

ATLANTA – Federal Reserve Bank of Atlanta President Dennis Lockhart moderates “Bridging the Border: Reinforcing Ties Between the U.S. and Mexico” panel discussion presented by the Federal Reserve Bank of Atlanta and the World Affairs Council of Atlanta

Apr 12, 2012
via MacroScope

Central bank balance sheets: Battle of the bulge

Central banks across the industrialized world responded aggressively to the global financial crisis that began in mid-2007 and in many ways remains with us today. Now, faced with sluggish recoveries, policymakers are reticent to embark on further unconventional monetary easing, fearing both internal criticism and political blowback. They are being forced to rely more on verbal guidance than actual stimulus to prevent markets from pricing in higher rates.

How do the world’s most prominent central banks stack up against each other? The Federal Reserve was extremely aggressive, more than tripling the size of its balance sheet from around $700-$800 billion pre-crisis to nearly 3 trillion today. Still, the ECB’s total asset holdings are actually larger than the Fed’s – it started from a higher base.

Apr 11, 2012
via MacroScope

Hysterical about hysteresis

Economists at times fancy themselves scientists – and they like to borrow from scientific lingo to lend their theories some extra gravitas.

The U.S. unemployment crisis is a case in point. There is a long-running debate among economists as to whether the bulk of joblessness is cyclical, resulting from a lack of demand in a depressed phase of the business cycle, or structural, the product of more fundamental issues such as skills mismatches. The latter problem is more intractable, economists say, and less amenable to treatment via an easy monetary policy.

Apr 11, 2012

Fed’s Lockhart says bar still high for more easing

WASHINGTON (Reuters) – The U.S. economy remains fragile but things would have to get a lot worse for the Federal Reserve to launch another round of monetary stimulus, Atlanta Fed President Dennis Lockhart said on Wednesday.

“I’m somewhat reticent to consider another round of quantitative easing at this time,” Lockhart told a press briefing on the sidelines of a conference sponsored by his bank.

Apr 10, 2012
via MacroScope

Biggest indicator of the week: China GDP

It wasn’t very long ago that economic numbers out of Asia would barely register a blip on Wall Street’s radar screen. That’s not the case anymore. Commerzbank touts Chinese gross domestic product figures due out on Friday as the most important gauge of global economic health following last week’s disappointing U.S. employment report.

Writes economist Jörg Krämer in a research note:

China’s economy has continued to slow into 2012 largely on the back of deliberate policy measures. We expect growth of 8% year-on-year in Q1, down from 8.9% in the final quarter of 2011 (consensus 8.3%), which is consistent with our call for full-year growth of 7.5% in 2012.

Apr 10, 2012

Bernanke says banks need bigger capital buffer

STONE MOUNTAIN, Georgia (Reuters) – Federal Reserve Chairman Ben Bernanke said on Monday banks need to have more capital at hand in order to ensure the financial system is stable.

Bernanke said regulators were taking steps to force financial institutions to hold higher capital buffers, even if they allow for a long period of implementation to prevent any market disruptions.

Apr 9, 2012

Bernanke says financial stability a work in progress

STONE MOUNTAIN, Georgia (Reuters) – The U.S. economy has yet to fully recover from the effects of the financial crisis, and regulators must continue to find new ways to strengthen the banking system, Federal Reserve Chairman Ben Bernanke said on Monday.

“The heavy human and economic costs of the crisis underscore the importance of taking all necessary steps to avoid a repeat of the events of the past few years,” Bernanke told a group of economists and finance experts at a conference sponsored by the Federal Reserve Bank of Atlanta.

Apr 9, 2012
via MacroScope

A worker is a terrible thing to waste

How bad is the U.S. employment situation? The Labor Department’s tally for March, which showed only 120,000 new jobs were created, raised doubts about the sustainability of a recent pick up in job growth. But to get a broader sense of what things are really like it helps to put things in a longer-term perspective.

Even with the 3.6 million new jobs created during the recovery, some 5 million more are needed just to make up for all of the jobs that were lost during the Great Recession. At March’s pace, it would take nearly four more years to get there – and that’s not accounting for population growth.

    • 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:
      English, Portuguese, Spanish, French
      2011 Deadline Club Award from the Society of Professional Journalists' New York Chapter
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