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.
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.
, 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.
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.