, Aug 23 (Reuters) – Central banks in rich
countries cannot ignore the international effects of their
policies, and conducting monetary policy in a vacuum could spark
another financial crisis, Mexico Central Bank Governor Agustin
Carstens said on Friday.
Speaking at the Kansas City Federal Reserve’s annual Jackson
Hole conference, Carstens warned about the dangers of a
mismanaged exit from unconventional monetary policies in
countries like the United States for their developing world
It will be a tough one to avoid. Federal Reserve Chairman Ben Bernanke’s absence from Jackson Hole is just one in a series of strong hints he will step down at the end of his second term in January. So, it is only natural that a lot of the talk on the sidelines of this year’s conference will inevitably revolve around the issue of his replacement.
But there is another, potentially more important question that needs to be answered in the shadow of Wyoming’s majestic Grand Teton peaks: Why have top U.S. Fed officials, even dovish ones, become increasingly queasy about asset purchases despite falling inflation?
With all the back-and-forth in the Yellen versus Summers Fed chair showdown, it’s easy to forget that the two once played for the same team – the Clinton administration.
This incredible photo from the Reuters archive features many of the key players in U.S. economic policy over the last two decades, tracing the arch of the 1990s tech boom, the early 2000s housing surge and the financial crisis of 2008-2009. They include Fed Vice Chair Janet Yellen, then advisor to Clinton, and Larry Summers, then Deputy Treasury Secretary. Both are now seen as leading candidates to replace Ben Bernanke as Fed chair next year.
ATLANTA, Aug 13 (Reuters) – The Federal Reserve could begin
reducing its bond-buying stimulus as early as its September
meeting despite inflation being below target, Atlanta Fed
President Dennis Lockhart said on Tuesday.
U.S. economic performance remains too mixed for Federal
Reserve policymakers to lay out a detailed path for reducing and
eventually halting their asset-purchasing program next month,
ATLANTA (Reuters) – U.S. economic performance remains too mixed for Federal Reserve policymakers to lay out a detailed path for reducing and eventually halting their asset-purchase stimulus plan at their September meeting, a top Fed official said on Tuesday.
Still, Atlanta Fed President Dennis Lockhart did not rule out some kind of decrease next month in the $85 billion monthly pace of bond buys currently under way. He simply suggested this would be a decision to be adjusted over time, not the beginning of a pre-ordained pullback.
Lost in the bizarre Yellen vs. Summers tug-of-war into which the debate over the next Federal Reserve Chairman has devolved, is the notion that President Barack Obama is getting a second shot at revamping the U.S. central bank.
The perk of a two-term president, Obama will get to appoint another three, potentially four officials to the Fed’s influential seven-member board of governors in Washington. This may buy the president some political wiggle room when it comes to his pick for Fed chair, since he might be able to placate Republicans with one or two “concession” appointments. Every Fed governor gets a permanent voting seat on the policy-setting Federal Open Market Committee.
WASHINGTON (Reuters) – So many workers have left the job market in recent years that the decline in the official unemployment rate to 7.4 percent last month may understate the extent of weakness in employment prospects.
This gives Federal Reserve officials considerable room to keep interest rates near zero, potentially well beyond current expectations of rate increases beginning in 2015.
Ellen Freilich contributed to this post
Talk about getting a word in edgewise. St. Louis Federal Reserve Bank President James Bullard got almost a full sentence in the central bank’s prized policy statement.
Some background: Bullard dissented at the Fed’s June meeting, arguing that, “to maintain credibility, the Committee must defend its inflation target when inflation is below target as well as when it is above target.” The latest inflation figures show the Fed’s preferred measure at 0.8 percent, less than half the central bank’s target.
Richard Leong contributed to this post
John Kenneth Galbraith apparently joked that economic forecasting was invented to make astrology look respectable. You were warned here first that it would be especially so in the case of the first snapshot (advanced reading) of U.S. second quarter gross domestic product from the U.S. Bureau of Economic Analysis.
Benchmark revisions to U.S. gross domestic product made for a bit of a mayhem for forecasters, who were way off the mark in predicting just 1 percent annualized growth when in fact the rate came it at 1.7 percent. Morgan Stanley had predicted a gain of just 0.2 percent.
WASHINGTON (Reuters) – Watch what Federal Reserve officials do, not what they say. That was Wall Street’s reaction to the U.S. central bank’s hints that it could soon begin to wind down its bond-buying stimulus.
Rather than heed Fed Chairman Ben Bernanke’s reassurance that the end of quantitative easing would not presage an imminent rise in interest rates, the bond market pushed borrowing costs sharply higher, a sign the central bank’s reliance on “forward guidance” may not be working as intended.