Federal Reserve

  • 2020-07-09 12:00

    By Greg Quinn and Brooke Migdon

    WASHINGTON (MNI) - Congress should extend fiscal stimulus as damage from Covid-19 lingers while the Federal Reserve should be ready with forward guidance and expanded QE if the economy weakens further, the OECD said Thursday.

    The banking system also faces risks if stimulus is withdrawn and there is a surge in bankruptcies from highly leveraged companies, the Paris-based group said in an annual review of the world's largest economy.

    "A sharp fiscal retrenchment would be counter-productive and as such the temporary provisions in the recent tax reform should not be allowed to expire. Furthermore, automatic stabilizers and additional measures implemented as part of the crisis reaction should be allowed to play out," the OECD report said.

  • 2020-07-07 15:53

    --Inflation Will Also Remain Subdued Due to Demand Shock

    Regional Federal Reserve Bank presidents Mary Daly and Tom Barkin on Tuesday highlighted risks that the U.S. job market won't return to normal and inflation will remain subdued through the Covid-19 restart.

    "I'm assuming that we will level off at some level that's not where we want it to be," because people may not visit stores and buy as much as they did before, Daly said of the labor market.

  • 2020-07-07 10:57

    By Pedro Nicolaci da Costa

    WASHINGTON (MNI) - Early hints of an economic recovery from the Covid-19-led slump are starting to peter out, Atlanta Federal Reserve Bank President Raphael Bostic said Tuesday, indicating some at the central bank are bracing for a more prolonged recession.

    More recent data suggest economic activity is "leveling off at a level lower than we were pre-crisis, which might suggest there is going to be some loss or that the time required to recover might be quite a bit longer than we might have otherwise expected," Bostic told a webinar sponsored by the Tennessee Business Roundtable.

    Until recently, Fed officials had been expressing confidence in a solid bounceback in the second half of the year after a historic second quarter downturn caused by ext

  • 2020-07-02 18:16

    By Evan Ryser

    WASHINGTON (MNI) - The Fed's balance sheet edged down for a third straight week as FX swaps and repos continued to roll off, Fed data released Thursday showed.

    The Fed's portfolio shrank USD73 billion to USD7.01 trillion, driven by a USD50 billion decline in FX swaps and a USD10 billion decline in repos. Usage of dollar swap lines by global central banks fell to USD225 billion from as high as USD450 billion only a month ago.

  • 2020-06-25 11:25

    By Pedro Nicolaci da Costa

    WASHINGTON (MNI) - The lowest paid workers have been hit hardest by the pandemic-led recession that rapidly pushed the U.S. unemployment rate into the double-digits, according to a new paper co-authored by Federal Reserve economists.

    That could mean the Fed will keep interest rates near zero for even longer than markets now expect as policymakers seek to ensure an eventual recovery reaches the most vulnerable corners of society, a concern Fed Chairman Jerome Powell has repeatedly emphasized.

    As of late May, employment for workers in the lowest 20% of the income distribution was still 30% lower relative to mid-February, said the paper, co-authored by four Fed staffers and presented at a Brookings Institution conference Thursday.

  • 2020-06-18 18:13

    --Declines On Repos And FX Swaps

    WASHINGTON (MNI) - The Fed's balance sheet shrank for the first time since late February as foreign exchange swaps and repo agreements rolled off, in a week where Jerome Powell moved to tweak corporate bond purchases and make Main Street loans more effective.

    The portfolio shrank USD74 billion to USD7.09 trillion, driven by a USD92 billion decline in FX swaps and a USD88 billion decline in repos. The balance sheet was still up 67% from USD4.24 trillion in early March.

    Policy makers say declining use of some emergency financing brought in when Covid-19 froze up markets is a sign the programs are helping return trading to normal.

  • 2020-06-18 13:27

    By Pedro Nicolaci da Costa

    WASHINGTON (MNI) - The Federal Reserve's Community Advisory Council in recent meetings called on the central bank to make significant changes to its emergency credit programs aimed at small businesses and municipalities in order to reach some of the hardest-hit communities in the Covid-19 pandemic.

    The group cited estimates that "the loss (permanent closure) of small businesses will be somewhere between 25 percent to 30 percent or even greater" nationwide, with huge implications for the country's employment and recovery prospects.

    As markets remain on edge about a possible second wave of infections, the Fed released records of two meetings held by its Community Advisory Council, one in April and the other in May.

  • 2020-06-15 12:44

    By Greg Quinn

    WASHINGTON (MNI) - San Francisco Fed President Mary Daly said Monday aggressive monetary stimulus will remain in place until the economic recovery regains most of the losses inflicted by Covid-19, and in the near term policy makers may need to deliver even more relief.

    "I expect our current stance of highly accommodative monetary policy to continue until the economy has largely recovered what's been lost due to the virus," she said in the text of a speech to the National Press Club in Washington.

  • 2020-06-11 17:40

    By Evan Ryser

    WASHINGTON (MNI) - The Fed's balance sheet hit a record USD7.17 trillion, growing only slightly, in a week where the Fed announced a floor on monthly bond purchases.

    The snapshot released Thursday shows the Fed's portfolio increased by USD3.7 billion. Balance sheet growth in the week through June 10 was driven by Treasury purchases gaining USD16 billion to a record USD4.15 trillion.

    A decline in repurchase agreements by USD44 billion offset small increases in other areas, such as the corporate credit facility and the paycheck protection facility, according to the Fed data.

    As the balance sheet reaches 38% of GDP, it is set to grow larger as output shrinks and the Fed gets set to begin the "Main Street" lending facility.

  • 2020-06-10 15:31

    WASHINGTON (MNI) - The following is the portion of a transcript from Federal Reserve Chairman Jerome Powell's press conference on Wednesday:

    Q: I came across a statistic the other day that amazing me. Since the March 23rd emergency announcement, every single stock in the S&P 500 has delivered a positive return. I'm wondering, given the levels of the market right now, whether you or your colleagues feel there is a possible bubble blowing that could pop and set back the recovery significantly, or that we might see capital misallocation that would leave us worse off when this is over? Second default is about ranges and wealth and target the markets after the great financial crisis, that the fed did contradict to wealth inequality in in country.